Indian Stocks Look Strong on Fresh Breakout
Indian markets have gained momentum in the recent weeks as global cues offer strength to local indices. Nifty posts biggest gain of the year as it moves beyond 61.8% mark on a closing basis with a breakout that may last for few coming weeks. This is the biggest gain Nifty has posted on a weekly basis since this year has started or since November last year keeping short sellers and bears trapped at lower levels. Positive global cues, comfortable inflation data, and Increase in FII's investment kept bulls in charge for the last 4 weeks. Global cues were largely positive with better than expected Core retail sales and retail sales numbers from the US and improved GDP numbers m/m from GB along with higher manufacturing production taking out the clouds of Brexit.
From derivatives data, it was pretty much clear that a trend is shaping beneath as the Open interest numbers that were seen on Nifty and Bank Nifty were not seen during the last couple of weeks of consolidation. The OI increase jumped sharply in Nifty by 14% and Bank Nifty by 20%. This further mandated the trend in control of bulls with a decisive breakout that was seen last week.
OI data points to highest Puts strike at 11400 while the Calls Strike with highest OI is placed at 11600 followed by 11500. Friday saw another leg of bullish move with an increase in OI of 11% in Nifty alone followed by Bank Nifty of 6%. This further indicates that dips will be utilized in short term with traders looking to see Nifty moving towards 11540 - 11580 while Bank Nifty is seeing resistance at levels of 29750 - 29800.
We believe the eyes in the coming week will be on the Crude oil as it is backed by demand due to cut in production by Iran and Venezuela as sanctions are imposed. The rupee has appreciated with USDINR moving close to $69 mark after almost 3 months as equity markets sentiment remains bullish.
In the coming week, We believe there should be some minor corrections and that should be utilized by bulls to enter this breakout. The resistance for Nifty is placed at 10540 - 10580 and that also coincides with OI analysis.
HPCL - HPCL has given a breakout from consolidation and closed above its previous resistances with higher volume. we expect HPCL to further move towards levels of 289 - 294 with SL of 266
L&T finance - The stock is in short term bullish trend while a recent consolidation and a rebound is seen in price action. We expect this to be a pullback and prices should continue to expand to higher levels of 154 with SL of 140.
ONGC - A fresh breakout is seen in prices after prices saw a correction to its 20 Day MA while a breach of resistance is also seen which was placed at 155 levels. We expect this stock to continue its trend to higher levels of 168 with SL of 150.