Day trading guide: Stock-specific rally within the auto space likely to continue

Amit Trivedi, YES Securities

Gaining ~12 per cent this month so far, Nifty surpassed 13,000 in today’s trade. However, Nifty’s high/low range was confined to 101 points, which is its lowest daily range since 23 October (if we exclude Diwali Muhurat trading band). Follow-up action post narrow range day needs to be closely watched as sustenance above 13,000 is essential to continue ongoing path at uncharted territory.

Bank Nifty regained momentum on the upside. However, it is yet to surpass the previous week’s high of 29,785. Mixed trends within banking stocks is possible.

After a few day’s consolidation, the Nifty Auto index resumed its uptrend. Positive follow-up action could continue stock-specific rally within the auto space.

Since the past couple of days, India Vix index has gradually gained traction. Today it reclaimed levels of 21 and is likely to remain above levels of 19.50-19 zone.

Derivative recommendations
Buy M&M Finance December future near Rs 166-167

• Stop loss: Rs 160
• Target: Rs 179
• Post a few days’ consolidation, bulls have regained momentum in the stock. Positive follow through could lift the stock higher till Rs 180 zone.

Sell Grasim December future near Rs 858-862

• Stop loss: Rs 878
• Target: Rs 818
• Multiple failed attempts to sustain above prior week’s high has stalled the recent momentum on the upside. Momentum indicators are showing negative divergence on short-term charts. Inability to sustain at current levels could attract mild pullback towards the Rs 818 zone.

Equity recommendation
Buy GNFC (Gujarat Narmada Valley Fertilisers & Chemicals) near Rs 206-203

• Stop loss: Rs 195
• Target: Rs 225
• After a prolonged consolidation, the stock has gained some momentum on the upside. Appearance of a large bullish candle on a comparatively higher volume warrants positive outlook for the stock.

(Amit Trivedi is CMT, Technical Analyst - Institutional Equities, YES Securities. Views are his own.)