Benchmark equity indices Sensex and Nifty ended the truncated week on a positive note following Union Finance Minister Nirmala Sitharaman's statement that the government has been offering sector-specific solutions to fight the economic slowdown and amid signs of easing of the trade war between the US and China.
Here are four stocks that could prove good trading plays this week:
The stock has been moving in a narrow sideways trajectory over the past couple of months. A few signals have emerged which point towards some up move in the price. The MACD has shown a positive crossover, and it is now bullish while trading above its signal line. The PPO has turned positive. A similar positive crossover is also seen on the weekly MACD, which is now in the buy mode. The weekly RSI has shown a strong positive divergence against the price. The RS line, when compared against the broader markets, as penetrated its 50-DMA. Any close below 248 should be taken as a stop-loss for this trade.
After retracing from the high point near 251, the stock has been testing its multiple support points that like between 224-230. A few signals indicate that some sharp move in price is likely over the coming days. The daily MACD has shown a positive crossover; it now trades above its signal line. The RSI has just broken out on the upside from a pattern formation with a bullish divergence against the price. The weekly Stochastic, too, has shown a bullish divergence. The price has closed above the upper Bollinger band, and this indicates the likelihood of a breakout from the present formation. Any close below 220 should be treated as a stop-loss for this trade.
The price has formed a bullish Ascending Triangle over the past couple of weeks. The current setup remains bullish, and the stock has attempted to break out of this sharply bullish setup. The daily MACD has shown a fresh positive crossover; it stays above zero line and trades above its signal line as well. The RS line, when compared against the broader markets, is inching higher, and it has penetrated its 50-DMA. RSI is neutral against the price, and it appears to be marking higher bottoms. The price has ended above the upper Bollinger band, and this further increases the possibility of an upward breakout over the coming days. Any close below 1650 should be treated as a stop-loss for this trade.
The stock is seen in the process of marking a temporary top for itself. After closing outside its upper Bollinger band on the weekly chart, the price has pulled itself inside the band again. On both daily and weekly time-frame charts, the RSI shows a bearish divergence against the price. The daily MACD has shown a negative crossover, and it now trades below its signal line. Some corrective retracement in the price of the coming days cannot be ruled out. Any close above the 4150 levels should be treated as a stop-loss for this trade.
Hedged Option Call
The options data as of Friday Close for the October 17, 2019 expiry shows that NIFTY has maximum Call OI built up at 11,400 followed by 11,500 strikes. The highest Put OI stays at 11,000 strikes.
Sell NIFTY 17OCT 11,200 CALL at 155.05 and Sell NIFTY 17OCT 11350 PUT at 114.10. Receive Net Premium of Rs 20,186.25. Maximum Profit Potential: 8,936.25. The trade will remain profitable above 11,080 and below 11,469.
(IMPORTANT: The Option Prices shown are as of Friday’s Close. The Pay-off Chart, Maximum Loss and Maximum Profit Potential can vary as per the actual execution price)