Day trading guide: Expect market volatility to continue till the Budget

Amit Trivedi, CMT, YES Securities

Snapping two sessions’ winning streak, the Nifty retreated after marking a record high of 14,754. Following the recent uptrend, the Nifty opened on a gap up note. However, inability to cling on to higher levels erased early gains. Momentum on the downside picked up as it was able to sustain below levels of 14,650. Eventually erasing prior session’s gain, the Nifty ended at 1459,0down 54 points. Thursday’s price action took the form of a bearish candle with another failed attempt to sustain above 14,650. It represents an immediate hurdle between 14,650-14,750 zone and negative follow-up action could drag the Nifty lower till 14,450 zone. Overall, such type of higher price volatility is likely to continue as we approach an important event of the Budget.

The Bank Nifty continued its underperformance, after marking a record peak of 32,842. It lacked the required momentum on the upside and went through the sharp decline. Post making day’s low below 32,000, the Bank Nifty ended at 32,187. Sustenance below 32,500 could continue underperformance of the Bank Nifty. PSU Bank index lost 3%. Moreover, all the public banking stocks ended in the red.

All the sectoral indices ended in the red except the auto index that managed to keep its head above water.

Derivative recommendations

Sell HDFC AMC January future near Rs 3,120-3,140

• Stop loss: Rs 3,230
• Target: Rs 2,930
• Today’s swift decline broke the immediate support near Rs 3,160. Post multi-month up move, recent corrective phase is likely to continue.

Sell Manappuram Finance January future near Rs 166-167

• Stop loss: Rs 172
• Target: Rs 157
• Post two days’ recovery, the stock failed to cling on to higher levels. Negative follow-up action could drag the stock below the Rs 160 zone.

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