The index witnessed a follow through move on the upside but was unable to retain its gains eventually leading to weakness, which pushed it below 11,500 again. On the daily scale, the index formed a “Dark Cloud Cover” candlestick pattern near its resistance zone. The occurrence of this bearish formation reaffirms the corrective move in progress until a decisive breach and close above 11,580 is not witnessed.
Derivative data indicates a band of 11,600-11,000 wherein the highest CE & PE OI concentration has been placed; however, the option pain level for the upcoming F&O expiry session is placed at 11,400. Traders are advised to avoid any leverage longs until closing above 11,580 is decisively attained. On the downside breach below 11,370 could trigger further selling targeting 11,230. The ongoing move qualifies as a corrective wave 4 within the larger bullish structure and a breach above 11,580 would unlock the bullish momentum for the final fifth until then expect the index to consolidate within 11,580-11,230 zone.
Stock: LIC Housing Finance
CMP: Rs 534
The occurrence of yet another inverse hammer near the resistance line of the rising channel indicates diminishing strength. The pattern indicates oversupply as the momentum indicators, too, have been reporting an overbought state with relative strength index (RSI) showcasing a negative divergence. We expect the stock to witness a meaningful correction ahead of its next up move. Hence, traders could deploy some shorts with a stop above Rs 542 with an expectation of a move towards Rs 510 first.
Stock: Jubilant FoodWorks
CMP: Rs 1,448
The occurrence of large bearish candle post sharp move on the upside in recent past indicates pause/termination of the bullish move that commenced from the lows of Rs 1,246 levels. Highest call bearing at Rs 1,450 strike in the expiry week would cap the upside for the stock. Key indicators in the overbought state along with the occurrence of large bearish candle suggest the stock might pull back till Rs 1,380 price confluence support levels prior to the resumption of bullish momentum. Hence, the stock should be sold with stops placed above Rs 1,480 levels for Rs 1,380 levels to be obtained in the coming weeks.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.