Trading Plan: Will Nifty and Bank Nifty selling pressure today? Three stocks signaling buy in volatile markets
Dabur, JK Cement and PEL are technically positioned for upside.
The domestic benchmark indices opened on a negative note yesterday, aligning with global cues. The Nifty began the day flat to negative and faced selling pressure in the first half. However, the index managed to absorb the weakness and rebounded in the second half, closing positively at 24,936.
The volatility index, INDIA VIX, cooled off by 6.43%, settling at 14.24, indicating a drop in market volatility. Similarly, after experiencing initial volatility, Bank Nifty recovered and ended the day on a positive note at 51,118. According to experts, “Technically, on a daily scale, the index formed a piercing line candle, signaling strength. If the index holds today’s low of around 50,370, a pullback rally towards 51,500-51,800 could be likely in the short term.”
For today’s trading session, Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, shares his insights on strategy for Nifty, Bank Nifty, and stocks in focus:
Nifty Outlook
Nifty found support around the 38.2% retracement level of the previous rise, with a bullish crossover in its momentum indicator MACD on the hourly charts. However, the MACD on the daily charts remains in sell mode, suggesting possible consolidation in the short term unless momentum shifts back to a bullish mode or the current downward momentum cycle on the daily chart completes.
Technically, Nifty has been forming lower tops and bottoms on the daily charts, with a reversal level at 25,276. On the hourly charts, Nifty has just started forming higher tops and bottoms, placing immediate support at 24,834. If this level holds, the short-term bias could remain sideways, with a potential bounce-back due to short covering. However, if 24,834 breaks, a breakdown towards 24,700 to 24,600 is possible.
From a derivatives perspective, Nifty has bounced from an oversold region, and the PCR (Put Call Ratio) has improved, with strong put additions from the 24,900 strike and below, alongside call unwinding from the 24,850 strike and above. The index is trading below its max pain and modified max pain levels of 24,950 and 24,980, respectively, and these levels could act as resistance alongside 25,000, where significant call open interest (OI) exists. In the short term, Nifty is likely to trade within a range of 24,800 to 25,050, and beyond that, 24,500 to 25,275.
Bank Nifty View
Bank Nifty rebounded sharply, forming a piercing line candlestick pattern on the daily charts, a bullish reversal signal. The MACD has returned to bullish mode, and the daily MACD remains in buy mode, suggesting the short-term trend for Bank Nifty is sideways to positive. Immediate resistance is seen at 51,637, the swing resistance, while immediate support is at 50,563, the swing low on the hourly charts. The short-term range for Bank Nifty is 50,500 to 51,500, with potential for further movement between 52,000 and 50,000.
From a derivatives perspective, Bank Nifty is trading within its max pain and modified max pain levels of 51,000 and 51,144, respectively. There was substantial call unwinding between 50,500 and 51,000 levels, and further unwinding was observed from 51,200 to 51,800 levels. Significant put writing at 50,500 to 51,000 strikes helped improve the PCR, though it remains below 1. Thus, the short-term trend appears sideways to positive.
Stocks in Focus:
1) Buy DABUR @ CMP: 663 | SL: 642 | Target: 695
Technically, Dabur has broken out of a sideways consolidation and is trading above its all-time highs, signaling strength on the price charts. The MACD is in buy mode on both daily and weekly charts, suggesting further upside. The stock is trading above its max pain and modified max pain levels of 650 and 653, respectively. Strong put additions at 640, 645, and 650 strikes, alongside call unwinding from 660 to 700 strikes, point to a slower but steady upward move.
2) Buy JK CEMENT @ CMP: 4,830 | SL: 4,600 | Target: 5,050 and 5,200
JK Cement has broken out of multiple swing resistances, turning 4,600 into a key support level. The MACD is in buy mode on both daily and weekly charts, suggesting a positive bias. The breakout is supported by an increase in volume and open interest (OI), raising the likelihood of further upside. The stock has seen substantial call unwinding between 4,700 and 4,800, and with strong put OI buildup between 4,400 and 4,700, it looks positive in the short term.
3) Buy PEL @ CMP: 1,069 | SL: 1,039 | Target: 1,150
PEL has broken out of a multiple swing resistance on the weekly charts and a falling channel, signaling a positive near-term outlook. The MACD has provided a bullish crossover on all timeframes, from daily to weekly charts, confirming the momentum setup. The stock faces a strong call OI at the 1,100 strike, which, if crossed, could lead to further gains. Strong put writing at 1,050 and 1,100 strikes suggests solid support levels, making the short-term view positive.
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