After a brief dip, Sensex and Nifty50 surged on Wednesday, driven by gains in HDFC Bank and Bajaj twins, despite ongoing foreign outflows and weak earnings.
The BSE Sensex was up 139 points, or 0.15%, at 80,359, while the Nifty50 rose 31 points, or 0.13%, to 24,503 around 9:20 am.
With this, Analyst Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research at SBI Securities, suggests how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data.
Technical Analysis
- Identify Trends: Utilize moving averages (50-day and 200-day) to identify bullish or bearish trends. A crossover can signal potential entry or exit points.
- Support and Resistance Levels: Determine key support and resistance levels to set stop-loss orders and profit targets. For instance, if Canara Bank is trading near a resistance level, consider taking profits or setting tighter stop-losses.
- Volume Analysis: High trading volumes during price increases can indicate strong momentum, whereas low volume may suggest weakness.
Market Sentiment
Stay updated with market news that may affect both Canara Bank and DLF. Economic indicators such as inflation rates, employment data, and overall market trends can influence investor sentiment significantly.
Canara Bank Gives Trendline Breakdown
On Tuesday, Nifty PSU Bank was the worst-performing sectoral index. It has given a fresh breakdown on a daily scale and formed a sizable bearish candle. Every constituent of the index closed in the red, reflecting broad weakness. The index has been notably underperforming the frontline indices over the past few months.
The stock of Canara Bank has given a horizontal trendline breakdown on a daily scale. This breakdown was confirmed by relatively higher volume and it has formed a sizable bearish candle on breakdown day, which is a bearish sign.
Currently, the stock is trading below its short and long-term moving averages. These averages have started edging lower, which is a bearish sign. Further, the momentum indicators and oscillators are also suggesting bearish momentum. The daily RSI has also given a horizontal trendline breakdown.
The derivative data aligns with the overall bearish chart structure. There is a notable concentration of call open interest at the 100 strike, followed by the 105 strike. While significant open interest on the put side is observed at the 95 strike. Talking about option chains, from 104 to 92 strikes, calls have witnessed call writing. While, on the put side, 97 to 86 strikes have witnessed put buying. This clearly indicates bearish momentum in the stock.
Hence, we recommend selling the stock in the zone of Rs 96-97 with a stop loss of Rs 100.50 level. On the downside, it is likely to test the level of Rs 90, followed by Rs 86 in the short term.
