Edited excerpts from a chat:
What’s going to be your strategy to play the November series expiry? What are the key levels to watch out for Nifty as it inches towards record high?
The pace of unwinding of futures is sharper than what we observed in October, signalling increased selling pressure given the fact that we are within touching distance of record peak. Adding to this, weakness in banking stocks, which account for roughly 20% of the index, suggests that profit booking is likely to persist. An evening star formation on Friday adds to such fears. However, despite the declines on Friday, the close was above the monthly breakout point, retaining the possibilities of a recovery move that could still put the trend back onto the 26550 trajectory. Towards this end, we will keep our eyes on the 26028-25980 region, for signs of recovery.
Nifty Bank has been making steady upsides. Do you see the uptrend to continue in the week ahead?After steadily climbing since 7th of November, Nifty Bank witnessed an evening star formation on Friday, signalling prospects of a downside move. If such pull back finishes before 58400, expect a vertical rise to 60300. Else, expected continued decline towards 57850. Favoured view expects downsides to be limited.
How to read the trend in PSU bank stocks? Should one wait for further dips to buy?The strong rally in PSU banking stocks following the wedge pattern breakout in September appears to be losing momentum. A Shooting Star candle has formed on the weekly chart, while the MACD histogram signals exhaustion. Additionally, a MACD signal crossover on the daily chart points to potential profit booking in the coming week. The average RSI of major index constituents is hovering near the overbought zone, further supporting the likelihood of a pullback.From a derivatives perspective, most PSU banking stocks witnessed either short addition or long unwinding on Friday, echoing the aforementioned signals ahead of the expiry week. On a stock-specific basis, names such as SBI, Bank of Baroda, PNB, Union Bank, Canara Bank, and Indian Bank have formed Shooting Star or exhaustion candles, favoring dips in the coming week. So, it is best advised to wait to see a dip before going long in PSU banking stocks.
Sammaan Capital shares fell 10% during the week. How would you trade the stock?
A bold recovery attempt on Friday after two days of powerful downsides turned out to be unsuccessful raising fears of extended downside. However, having already reached 62% fibo of the breakout move that has been on since late September, we are encouraged to keep fancying upswing possibilities. Supporting this surmise is the positive signal from oscillators that points to oversold condition as well as positive divergence.
Give us your top picks for the week.
ORIENTELEC (CMP: 182)
View: Buy
Target: 197
SL: 174.5
The stock has been declining since the beginning of this month and is now showing signs of exhaustion at lower levels. A hammer candle has formed on the daily chart, and the 14-day RSI indicates a deeply oversold condition, suggesting a potential near-term pullback. We expect the stock to move towards 197 in the short term. All long positions should be protected with a stop-loss placed below 174.5.
BORORENEW (CMP: 590)
View: Buy
Target: 664
SL: 569
The stock has been moving within a rising trend channel since May, respecting the channel extremes multiple times. Currently, it is near the lower boundary of the channel, and the 14-day RSI is close to the oversold region. Additionally, the MACD is showing early signs of exhaustion, reinforcing the possibility of a near-term pullback. We expect the stock to move towards 664 in the coming days. All long positions should be protected with a stop-loss placed below 569.
