The Nifty50 index gave up most of its gains post occurrence of “Bullish Piercing” pattern in the previous trading session. With most oscillators in their respective oversold zone and subsiding incremental momentum on the downside, it appears that the ongoing bearish move could end soon. Highest call bearing at 11,300 strike price for next weekly expiry continues to act as resistance on an immediate basis and breach above the same could trigger short covering move on the upside targeting 11,420 levels.
Short-term traders should refrain from initiating fresh shorts as most short horizon oscillators are now approaching their respective oversold territory. It’s prudent to book profits for existing shorts as index tested 11,150-11,030 price confluence support zone and await for bottoming out a formation to occur around the support levels for initiating longs as a presumption of reversal for larger move on the upside remains intact.
Stock: Hindustan Unilever (HUL)
CMP: Rs 1,671.05
The stock made an unsuccessful attempt of breaching above the resistance levels of Rs 1,720, post bouncing higher from double bottom levels around Rs 1,650 levels. Consistent call writing at Rs 1,700 strike along with an unsuccessful attempt at closing above its 50-DEMA (Double Exponential Moving Average) suggests it might breach below its double bottom low of Rs 1,650 in coming sessions. Hourly RSI (relative strength index) breached below its historical support levels around 40 supporting the overall setup of lower prices. Hence, HUL can be sold with stop placed above Rs 1,690 levels for Rs 1,640 target to be attained in the coming weeks.
Stock: Bata India
CMP: Rs 1,328
Bata saw a sharp recovery post minor slippages below Rs 1,300 levels on the downside that happens to be its highest put congestion bearing strike on the downside. “Bullish Divergence” in 240 min chart oscillators while in their respective oversold territories along with further put addition at Rs 1,300 strike indicates the level might act as strong support. The stock can be bought above Rs 1,340 with stop placed below Rs 1,300 levels for technical bounce targeting Rs 1,409 levels in the coming weeks.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.