Market witnessed sharp short covering move, Nifty likely face resistance at 9,000
The market traded with positive sentiments and witnessed short covering move on Friday; volatility index came lower by 7.30 per cent. Nifty managed to close at 8745.45, adding 482 points. Rupee remained weak and closed at 75.1525. Technology, FMCG and metal sector traded with positive sentiments and no sector closed in red mark. Nifty bank closed at 20,317.60 adding 234.10 points to the previous day’s closing.
As per the weekly option data, handful of put writing on lower strikes, ranging from 8,000 to 8,500, is seen which shows Nifty would face firm support in sub 8,500 zone. 8,500 will act as support as maximum put open interest (OI) is placed here. We can witness short-covering move along with addition of fresh position only if Nifty breaches level of 9,000. Therefore, traders should try to create long position keeping close eye on 8,500.
We can see a big momentum in following stocks:
Buy: Bandhan Bank Limited (Above Rs 240)
Target: Rs 265
Stop loss: Rs 225
The stock is witnessing reversal from lower levels of Rs 200. Further buying momentum would be witnessed if stock moves above 240. The stock is showing sign of oversold on RSI indicator. Breakout from 240 would lead it to witness more upward movement. Considering the technical evidence discussed above, we recommend buying the stock above 240 for the target of Rs 265, keeping a stop loss at Rs 225 on a closing basis.
Buy: Motherson Sumi Systems Limited (Above Rs 70)
Target: Rs 82
Stop loss: Rs 64
The stock is forming a reversal pattern on daily charts along with forming inverted hammer candlestick on weekly candle. Stock is showing signs of over-sold on RSI indicator. Breakout from 70 would lead stock to witness more upward movement.
We recommend buying the stock above 70 for the target of Rs 82, keeping a stop loss at Rs 64 on a closing basis.
Disclaimer: The analyst does not hold position in any of the stocks mentioned above.