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Unlocking Profits: SBI, Asian Paints, Wipro & Nifty Midcap - Trading Plan Revealed

Published 24-06-2024, 10:52 am
NSEI
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NIFMDCP100
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ASPN
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ICBK
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RELI
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SBI
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Greetings, fellow traders!

I hope you all crushed it in the market last week, just like we planned in my daily pre-market videos. This is as in my Youtube channel (@sandeepsinghahluwalia) I analysed a lot of the indices expiring plus SBI, ICICI Bank (NS:ICBK), and Reliance Industries (NS:RELI). I am glad to say that all stocks and indices have performed exactly as predicted.

Now today we will be dissecting three stocks and one index. The stocks are Asian Paints (NS:ASPN), Wipro (NS:WIPR), and State Bank of India (NS:SBI). While the index is the Nifty Midcap. Wipro needed a more in-depth analysis; thus, it is better suited for a video format. This is as it is being removed from the Sensex. Hence, that will affect investors plus traders who trade it via derivatives. Therefore, a link to that YouTube video can be found below. The Nifty Midcap analysis is part of the usual pre-market series, as it is covered every Monday due to its expiry. Therefore, that too is in the video below.

SBI: Playing the Box Range:

Remember the pre-market video on SBI from last Wednesday? I pinpointed the resistance zone at 863, a level where the bulls would encounter significant headwinds. Right on cue, the stock climbed to 861 before retracing back to the support zones we identified. By Friday, SBI had hit our first downside target of 835 and dipped close to our next target of 825 as it made a low of 828.

So, how do we trade SBI moving forward? The levels and overall game plan remain largely unchanged from the video. However, I now expect SBI to trade within a box range of 825 and 845. This is as this range will let the stock shake off the weak hands on both the short and long sides. However, a breakout above this box range will not give much of a return. This is as a rise will lead to the equity getting stuck at the previously mentioned resistance of 863. Conversely, a breakdown below the box range support at 825 will trigger an initial decline to 817. If 817 breaks, then that is what will give us a meaty short. This is as the entire price action pattern will shift, and this will pave the way for a steeper descent to 790.

Asian Paints: A Bearish Tale Unfolds:

Asian Paints hasn’t exactly been a star performer in 2024. After forming a top in December 2023, the stock has plummeted from a high of 3,423 to a low of 2,650. After which, it got trapped in the box range it currently is in, and I suspect this is the prelude to another lower leg.

Here’s why: Asian Paints is grappling with a formidable quantitative resistance zone between 2,950 and 2,970. Thus, based on both price action and technical indicators, any attempt to breach this zone is destined for failure. Let’s break it down:

  • Weekly Chart: All prior upward moves in this zone have been forcefully rejected. Plus, the stock is unable to surpass its key moving averages.
  • Volume Buildup Indicator: This indicator remains neutral as of now. This implies that any upward surge will lack the momentum to break above the resistance levels. Hence, any up-move to 2,970 will be short-lived, as it will simply be a dead cat bounce.
  • Trend Catcher: Currently flatlining at zero, this indicator signifies a directionless daily chart. However, the way the volume buildup is behaving signals to us that a dip below zero is highly likely. If this occurs, then it would open the door for a significant downside move.

How to trade Asian Paints? As long as the stock remains tethered below the 2,950 to 2,970 resistance range, there’s no threat of a large uptrend. However, on the downside, if we breach the 2,860 support, then this will probably trigger a rapid decline to 2,800. If that support gives way, then brace yourselves for a further decline to 2,740 and 2,690.

Capitalising on the Move? Given the nature of this move—part swift and part sluggish—derivatives traders should use a combination of option buying and option selling strategies. This is as using only one tool will not let you capture the larger move. Hence, for the swift drop from a potential break of 2,860 to 2,800, option buying would be ideal. However, for the rest of the decline, option selling becomes the preferred approach. This is as the slow downward drift will cause call prices to decay consistently. This will place call (CE) sellers in a position to rake in profits with minimal risk if hedged. In fact, I already hold CE sells in the June series, and I may roll them over to the July series once I book profits this week.

The bottom line:

Asian Paints is presently leaning towards the downside. Thus, anyone contemplating a long position should maintain a tight stop-loss. This is as any up move is likely to be a dead cat bounce. SBI, on the other hand, is performing exactly as anticipated in last week’s pre-market video. So stick to the plan outlined above. Plus, if you crave a more detailed breakdown of how to trade it, then revisit the video I made on SBI as it is shared below.

Lastly, for insights on trading the Nifty Midcap expiry plus Wipro, check out the video shared below. This is as Wipro’s video is very detailed as it covers what will be occurring to the stock in the days to come. This is as its removal from Sensex will create a problem for some and an opportunity for others.

Until next time, happy trading!

NB: Shared a link to the YouTube video on SBI which I discussed above. It lets you as a trader understand the analysis better. This is as the move is still in progress and due to that the video has immense value for traders. Video link - https://youtu.be/ucXCJWtN0zU

Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Thus, you must trust your analysis and judgement before making investment decisions. The information provided is for informational purposes only and should not be interpreted as a proposition to buy or sell any securities.

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