Add long positions near support levels

Mumbai: After a spectacular three-day rally, the benchmark indices witnessed profit booking near 57,900 resistance level. On Wednesday, the opening was positive, but due to intraday profit booking at higher levels it corrected sharply. Among sectors, strong buying was seen in reality stocks. As a result, the Nifty Reality index rallied over 5 per cent. Whereas, Metal and IT indices registered technical sell-off at higher levels. Technically, the index has formed bearish candle which indicating, profit booking at higher levels likely to continue in the near future. However, the medium-term formation is still in to the bullish side.

"We are of the view that, due to overstretch rally market may continue narrow range activity. Hence, the ideal strategy would be adding long positions near important support levels. For the trend following traders, 57,000 and 56,900 would be the key level to watch out," says Shrikant Chouhan, EVP (equity technical research), Kotak Securities. On the flip side, 57,600/57800 could act as an intraday resistance level. In case of intraday correction then contra traders can take a long bet near 56,900 support level with strict 100 points stop loss, he added.

Stock Picks

♦ AMARAJABAT: Above Rs714 with a target of Rs722 and Stop loss of Rs707. The stock is in upward trending channel and is on the verge of a breakout.

♦ IBREALEST: Above Rs145 with a target of Rs148 and Stop loss of Rs143. It has support of 8 and 40 EMA.

♦ GODREJCP: Above Rs1,100 with a target of Rs1,111 and Stop loss of Rs1,090. The stock is in upward trending channel and has given a breakout.

♦ PFIZER: Above Rs5,830 with a target of Rs5,890 and Stop loss of Rs5,770. It has a support of 8 EMA.

♦ VEDL: Above Rs300 with a target of Rs303 and Stop loss of Rs297. It has reversed from the support of 8 EMA.

(Source-CapitalVia)