Trade Call: 2 Technical Stock Picks By Sumeet Bagadia On Thursday, 4th Jan

Gift Nifty fell by 0.5 per cent during Thursday's early trading, while US and Asian markets were down, which might lead to further dips in the Indian market amid gloomy global cues. Sensex closed on Wednesday at 71,356.6, down 535.88 points, or 0.75%. As the Nifty ended at 21,517.35, down 148.45 points, or 0.69%. On top of that, investors will remain cautious and the market will remain volatile due to the release of FOMC meeting minutes and the US job data.

Nifty Outlook

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities said, "The Futures Open Interest (OI) indicated buildup of short positions in Nifty futures Wednesday. Short buildup is a process where traders initiate fresh short positions, which leads to the price moving down.

The Long-Short ratio, on the other hand, fell further to 68.01% on 2nd January compared to 68.84% on 1st January, as the Foreign Portfolio Investors (FPIs) marginally increased their short exposure in Index futures for the second consecutive day. The Put-Call Ratio (PCR) fell to 1.40 on 3rd January from 1.54 on 29th December as the call writers (bears) continued to create pressure on the put writers (bulls), making the resistance stronger."

"Strong call writing (bears entering) supported by put writers exiting (bulls moving out) was observed at 21,700 & 21,800 Strike in Nifty for the second consecutive day, which kept the Index under pressure. Call writers (bears) created pressure on the put writers (bulls) at 21,500 Strike in Nifty, which is the immediate support for the Index.

Strong call writing compared to put writing at a particular strike price, indicates that the support is getting weaker. The option activity at 21,500 Strike will provide cues about Nifty's Intraday direction on Thursday. The bulls (put writers), however, are leading the bears (call writers) by a huge margin at 21,500 Strike after today's close," he further added.

"From a technical perspective, Nifty formed a bearish candle with a substantial body in the daily chart. The Donchian Channels, which identify bullish and bearish extremes, indicates that Nifty is holding its middle band. Key support levels are identified at 21,400 while resistance is placed at 21,700 levels," stated Om Mehra, Technical Analyst, SAMCO Securities.

Bank Nifty Outlook

"Bank Nifty concluded the session at 47,704.95 with a marginal decline of 0.12%. It remained range-bound throughout the day as the Index traded within morning high and low. The 20-day moving average for Bank Nifty stands at 47,480 levels," said Om Mehra.

"Bank Nifty, on the other hand, shrugged off its initial weakness and rose steadily throughout the day to close at 47,705, down 57 points. The put writers (bulls) built aggressive positions at the 47,500 Strike in Bank Nifty, thereby keeping the Index from falling below 47,500 level.

The support at 47,500 level has become stronger after today's trading session. Bank Nifty has formed a hammer candle on the daily chart today which indicates buyer interest at lower levels. Bank Nifty can see an Intraday fall if put writers exit (bulls making exit) and call writers enter (bear entry) at 47,500 Strike," added Ashwin Ramani.

Stocks To Buy Today

On Thursday, January 4, 2024, Sumeet Bagadia, the executive director of Choice Broking, recommended buying two stocks. For Vedanta and V-Mart Retail, the entry price, stop loss, and target price are outlined below.

Vedanta

Buy VEDL in Cash @ Rs 263.80, stop-loss: Rs 256, target: Rs 280

Vedanta Limited (VEDL), currently trading at 263.80 levels, showcases a robust technical posture by maintaining its position comfortably above the key 20-day, 50-day, and 200-day Exponential Moving Averages (EMA). The stock's recent consolidation within the 256-260 levels has set the stage for a potential upward movement, highlighted by a bullish candlestick pattern on the daily charts.

A modest resistance zone at 267 levels presents a crucial juncture for VEDL, and a successful breach could propel the stock towards the target of 280 levels and beyond. Investors should closely monitor the stock's performance around the resistance level, as it could dictate the sustainability of the positive momentum in the near term.

Based on this analysis, one may consider buying VEDL at the CMP of 263.80, setting a stop loss at 256, and aiming for a target of 280.

V-Mart Retail

Buy VMART in cash @ Rs 2092, stop-loss: Rs 2022, target: Rs 2179

VMART is currently trading at 2092 levels, displaying a robust uptrend with a significant green candle on the daily chart. Adding to the positive momentum, there has been an increase in trading volume, indicating growing market interest.

The breakout above the prior resistance at 2070 levels today suggests a potential move towards the target of 2179 levels. The momentum indicator RSI at 70 levels further supports the stock's strength. This favourable technical setup indicates a bullish sentiment, and investors may consider this breakout as an opportunity to implement prudent risk management strategies in their trading decisions.

Based on the above analysis we recommend buying VMART at CMP of 2092 for the short to medium term with a stop loss of 2022 for the target of 2179.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.