Day trading guide: 4 stock recommendations for Friday

Kotak Securities

Nifty

Hammer candlestick formation followed by inside body candles clearly indicate indecisiveness between the bulls and the bear. However, the medium-term texture of the market is still on the bullish side, but the daily and the intraday charts suggest that the uptrend may take a temporary pause near 14,620. If the index sustains above the same continuation of uptrend, it will continue to head towards 14,700 -14,775. On the flip side, trading below 14,500 could trigger quick short-term correction up to 14,350-13,250.

Tech Picks
Analyst: Shrikant Chouhan, Executive Vice President - Technical Research

HDFC Bank: BUY

• CMP: Rs 1,468.75
• Target: Rs 1,515
• Stop loss: Rs 1,440
• The stock has given a breakout from rectangle formation on the daily and weekly charts.

Tata Steel: BUY

• CMP: Rs 706.35
• Target: Rs 727
• Stop loss: Rs 695
• Strong breakout continuation formation likely to continue in the near term.

Muthoot Finance: BUY

• CMP: Rs 1,251
• Target: Rs 1,290
• Stop loss: Rs 1,232
• The stock is trading above short-term averages with strong higher bottom formation on the daily charts.

Siemens: BUY

• CMP: Rs 1,651.15
• Target: Rs 1,700
• Stop loss: Rs 1,620
• Strong Bar Reversal formation along with positive Parabolic SAR series suggest uptrend expected to continue in the near term.

F&O Strategy
Analyst: Sahaj Agrawal, DVP-Derivatives, Research

Futures: Buy ITC Future Jan at 214

• Stop loss: Rs 208
• Target: Rs 230
• Range breakout seen above 213 on spot.

Options: Nifty Short Strangle

• Sell 21 Jan 14,950 CE at 22 and Sell 21 Jan 14,200 PE at 32
• Premium Inflow (Max Profit): 54
• SL: 80

The Nifty for the past few weeks has been trending quite strongly while it made an all-time high of 14,653. However, the number of stocks in UpTrend is reducing gradually from the NSE 200 basket inkling a consolidation/range bound activity going ahead. Based on the current ATM IV of around 17%, a probabilistic (70%) range for Nifty till 21 Jan should be between 14,250 and 14,950. In this situation, a Short Strangle may be initiated.

Forex & Interest Rate Technical
Analyst: Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives

USD-INR: Feb 24 expiry.

• Buy 73.50 Put option
• Sell 72.50 Put option and sell 74.00 Call option
• Equal quantity on all legs.
• Total Premium paid: 14 paise
• Max profit: 86 paise
• Stop Exit strategy if USD-INR trades above 74.00 levels.

Commodity Calls
Analyst: Ravindra Rao, VP- Head Commodity Research