Indices Rallied Due To Short Covering; Nifty Managed To Cross 9300

Markets traded with positive sentiments on Wednesday and witnessed sharp short covering in financial and banking stocks. Nifty managed to close above 9300. Nifty closed at 9314.95 adding 285.90 points. Financials, private banking and IT indices closed on a positive note, but Pharma and media stocks closed in red mark. Nifty Bank closed at 18,710.50 adding 995.92 points from the previous day’s closing.

As per weekly options data, a handful of put writing on higher strikes ranging from 9,000 to 9,300 is seen which shows Nifty would witness support in sub 9,200 zone. 9,000 will act as support as maximum put OI is placed here. But Nifty is likely to face stiff resistance at 9,300 as maximum call OI is placed hereafter 9500. We can witness strength only if Nifty breaks the level of 9,300. Therefore, traders should try to create a long position keeping a close eye on 9,200, as it might act as a base for weekly expiry.

We can see a big momentum in the following stocks:

Buy: HDFC Bank (NS:HDBK) Limited (Above Rs 904)
Target (NYSE:TGT): Rs 960
Stop loss: Rs 875
Stock is witnessing reversal patterns in daily charts and bounced from its important moving average. Further stock is witnessing resistance breakout from 904 might lead the stock to witness more upward movement.
Considering the technical evidence discussed above, we recommend buying the stock above 904 for the target of 960, keeping a stop loss at 875 on a closing basis.

Buy: HDFC Limited (Above Rs.1580)
Target: Rs 1680
Stop loss: Rs 1535
Stock is trading at the major support zone in daily charts. Further stock is taking support from its important moving average. Breakout from its resistance levels of 1580 would lead the stock to witness more upward movement.
We recommend buying the stock above 1580 for the target of 1680, keeping a stop loss at 1535 on a closing basis.

Disclaimer: The analyst does not hold a position in any of the stocks mentioned above