After Tuesday’s volatile action, Nifty opened in negative on Wednesday, However, on the flip side, it defended prior session’s low and recouped early losses. Yet again it failed to sustain at higher levels and eventually ended at 17,711 – down 37 points. Nifty formed an ‘inside bar’ chart pattern (i.e. it traded within prior session’s high/low range) and this pattern indicates potential consolidation ahead between 17550-17900 zone.
Even Bank Nifty defended prior session’s low. However, it failed to enter into a positive territory. Inability to surpass 38,000 level stalled intraday recoveries and eventually Bank Nifty settled at 37,743 – down 202 points. Sustenance above 38,000 is essential for gaining some positive traction. A divergent trend is seen within the banking space. The Private Bank index ended lower, while the PSU Bank index rose 2.7 per cent.
Meanwhile, India Vix rallied further, reclaiming levels of 19; it represents that higher price volatility is likely to stay here.
Recommendations
| Buy | Rs 85 strike October call option near 4
Stop loss: 1.5
Target: 10
A sizable bullish candle with multiple lows near Rs 78 could mean that the stock is due for mean reversion. Sustenance above Rs 80 level could attract rally towards Rs 90-95 zone.
| Buy between Rs 94-93
Stop loss: Rs 87.5
Target: Rs 106
With sustained move above short term averages, the series of ascending tops and bottoms remains intact. Appearance of a bullish candle at current juncture is likely to resume uptrend.
(The author, Amit Trivedi, CMT, is Technical Analyst – Institutional Equities, YES Securities. The view are his own)
