Eventually Nifty formed an ‘in neck’ candle pattern (i.e. opened above prior session’s high but closed below Tuesday’s close). The said pattern indicates that Nifty has failed to provide positive follow-up action to its prior bullish candle.
Given India VIX is sustaining above levels of 22, Nifty will continue to remain volatile. The sustenance above 17,200 is essential to gain some positive traction.
Inability to surpass levels of 38,000 erased early gains of Bank Nifty. Mixed action among banking stocks is possible going ahead. The metal index is trending lower and negative follow-up action is likely to attract stock-specific corrections.
Recommendations
Buy UPL 700 February put option near Rs 12-13
Stop loss: Rs 6
Target: Rs 30
A recent swift decline in the stock broke multiple support levels. The appearance of a bearish candle indicates the influence of resistance at play, hence, a further correction to Rs 660-650 is possible.
Sell Tata Steel March future near Rs 1150
Stop loss: Rs 1,175
Target: Rs 1,090
Downward action in stock ensures a shift of range on the downside. Inability to hold current levels is likely to drag the stock to the Rs 1,090 zone.
(Amit Trivedi is CMT, Technical Analyst – Institutional Equities, YES Securities.)
