Nifty: Day trading guide for Tuesday

Nifty outlook
Analyst Name: Dharmesh Shah – Head, Technical

Weekly price action formed a bullish candle with a higher high-low as the benchmark index maintained the rhythm of sustaining above its 50 days EMA since May 2020 and time wise correction not exceeding for more than a week despite global volatility. Going ahead, we expect the index to trade with a positive bias in the upcoming truncated week, and see a healthy base formation in the range of 15300-14700 amid stock specific activity. Meanwhile, we expect broader markets to continue with its relative outperformance. Hence, we advice to capitalize the dips to accumulate quality large caps and midcaps would be the prudent strategy to adopt.

Analyst Name: Dharmesh Shah – Head Technical

F&O Strategy:
Analyst name: Raj Deepak Singh – Head, Derivatives


F&O Strategy: Infosys Covered Call Strategy

Buy Infosys March futures in the range of Rs 1335-1340 and Sell 1400 Call at 16-18

• Target: 1410
• Stop-loss: 1295

Rationale:

• Infosys has witnessed delivery based volumes were near 1260-1280, which is likely to be a strong support for the month. As the stock has been sustaining above 1300 levels, despite broader market weakness, out performance can be expected from the stock in the coming sessions.
• The open interest in the stock has increased gradually in the last two months along with incremental stock price. Current OI in the stock is at a 10-month high. Considering continuous additions and resilience of the stock, we expect further fresh accumulation to be seen, which should take it higher in the coming sessions.

F&O Strategy: Short HDFC Ltd

• CMP: 2512
• Target: 2430
• Stop-loss: 2570

Rationale:

• As Nifty is finding pressure at higher levels since last few sessions, stocks from banking and financials are witnessing continued weakness. HDFC Ltd, which saw a decent up move last month observed a round of profit booking and is witnessing significant additions at ATM Call strikes.
• Stock ATM Call strikes of 2600 saw almost 1000 contracts additions, which is likely to keep the stock under pressure. Closure of Put writing positions to lower strikes is indicating further downsides.

Forex Strategy:

Buy USDINR

• Buy USDINR at 73.35 – 73.40
• Target: 73.90
• Stop loss: 73.15

Rationale:

• Due to sharp rise in US bond yields, Dollar index has moved towards 92 levels and further weakening in currency pair can be expected.
• Ongoing high volatility across the asset classes was also visible in currency and be expect USDINR to remain under pressure till it is not moving below 73 levels.

Short GBPINR

• Sell GBPINR at 101.60-101.80
• Target: 100.20
• Stop loss: 102.40

Rationale:

• After making a high of 1.42, GBPUSD came under pressure amind rising Dollar index and moved below 1.39 levels.
• GBP is likely to come under pressure below 1.38 and it might move towards 1.36 in the coming weeks which should trigger GBPINR move towards 100.2.