The benchmark indices ended the volatile week on a negative note. After rallying 7.7 per cent from the July month’s low, Nifty50 snapped its two-week winning streak. During the recent rally, Nifty’s internal breadth was poor, which eventually triggered profit-taking in stocks. Nifty’s throwback from the record high ensures an immediate hurdle near the 16600-16700 zone, negative follow-up action could continue the corrective decline till 16320-level.
After multiple failed attempts to sustain above 36000, Bank Nifty faced sharp downticks till 34927-level. Sustenance below 35500 could attract further underperformance in the Bank Nifty.
Post the six-month rally, Nifty metal index made multiple peaks near 5900 in August. However, the inability to build on gains at higher levels dragged the index lower by 8.5 per cent this week. Negative follow-up action will continue to attract stocks specific correction within metal space.
Meanwhile, the FMCG index outperformed this week (up 4.3 per cent). The strategy remains to buy on dips as the FMCG space has more room on the upside.
Recommendations
Sell
TVS Motors August futures near Rs 515-517
- Stop loss: Rs 527
- Target: Rs 494
Recovery during the week remained short-lived, the appearance of multiple bearish candles indicates the influence of resistance at play.
Bear put spread on
UPL (expiry 26th August)
- Buy 730 put near 14.5, and
- Sell 700 put near 4.5
- Current spread 10
- Stop loss on spread is 1
- Target on the spread is 29
Maximum profit if the stock expires at Rs 700 (i.e. ~20 points). The ongoing correction could continue till Rs 700.
(Amit Trivedi, CMT, Technical Analyst – Institutional Equities, YES Securities)
