Day trading guide for Tuesday

Analyst: Dharmesh Shah – Head Technical


Outlook: Nifty
Weekly price action formed a strong bull candle carrying higher high-low signalling. Resumption of up move was on expected lines and resolved out of the past two months’ consolidation (14,900-14,400). We reiterate our positive stance as we expect the Nifty to challenge its lifetime highs of 15430 in the coming week. The elongated up moves followed by shallow price correction highlights robust price structure.

The Nifty midcap and small cap indices recorded fresh 52-week highs. The broader market outperformance highlights inherent strength that augurs well for durability of the ongoing up trend. We expect the broader market to accelerate their relative outperformance in coming weeks.

Stock recommendations
Analyst: Dharmesh Shah – Head Technical

F&O Strategy

Analyst: Raj Deepak Singh, Head Derivatives


Buy L&T June futures

CMP: Rs 1,453

Target: Rs 1,513

Stop loss: Rs 1,410

Rationale:

1. The open interest in L&T has declined sharply in the current month amid short covering. Since March, the stock has witnessed a downtrend with short additions. These positions have begun to be covered. We now expect momentum to be seen along with covering of short positions in the coming sessions.
2. As the stock has surpassed its highest Call base of 1,400 of May series, closure of positions was seen in near OTM Call strikes. Positions are shifting at higher OTM strikes to 1,500 and 1,600 in the next series. At the same time, the Put Open Interest base is strengthening at the 1,380 and 1,400 Put strike and that should act as support on the downsides.

Buy June futures

CMP: Rs 150

Target: Rs 165

Stop loss: Rs 142

Rationale:

1. Coal India has seen some consolidation post its results and moved back to Rs 150 levels. Fresh longs were formed in the stock during the May series and rollover of positions are visible in the June series as well. We expect positive bias to continue in the near term.
2. The stock is trading near its major Call base of 150 and while the highest Call base is placed at OTM 160 strike, we expect the stock to surpass these levels in the ongoing momentum.

Forex Strategy:

Sell USD-INR at 73.15-73.20

Target: 72.60

Stop loss: 73.35

Rationale:

• For the fourth week in a row, INR managed to appreciate and trade near its important level of 73.
• Positive domestic equities and weakness in index will continue to provide cushion to INR.

Buy EUR-INR at 89.00-89.10

Target: 89.80

Stop loss: 88.75

Rationale:

• EUR-INR reverted sharply from 88.8 levels as weakness in the Dollar index coupled with strong economic data provided support to the pair.
• EUR-USD continued to trade higher and recent news provided positive gains, which helped EUR-USD to touch 1.21 levels.