Chandan Taparia’s News Today : On Monday, August 26, the Indian stock market witnessed impressive gains, with the benchmark indices Nifty 50 and the Sensex both rising by nearly 1%. This positive movement was largely driven by investor optimism following U.S. Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole conference last Friday. Powell’s remarks appeared to reassure investors, fueling a rally in global markets that extended to India.
The Nifty Index had a strong start, opening with a gap-up and swiftly climbing towards the 25,043 level during the first half of the trading session. This upward momentum was followed by a period of consolidation, as the index settled into a more stable range for the remainder of the day. By the close of trading, Nifty had formed a bullish candle on the daily chart, characterized by a long lower shadow. This pattern suggests that any minor dips during the session were quickly absorbed by buyers, leading to a gain of around 190 points. The index ultimately closed above the 25,000 mark, which is considered a crucial level for sustaining further upward movement.
Chandan Taparia, Head of Equity Derivatives and Technicals at Motilal Oswal Financial Services Ltd. (MOFSL), provided insights into the market’s technical outlook. He emphasized the importance of the Nifty holding above the 25,000 zone to maintain its upward trajectory. According to Taparia, if the index can sustain this level, it may move towards the next resistance levels at 25,150 and 25,250. On the downside, support levels are identified at 24,850 and 24,750, which could serve as potential areas where buyers might step in if the market experiences a pullback.
Volatility, as measured by the India VIX, increased slightly on Monday, rising by 1.33% from 13.50 to 13.73. Despite this uptick, volatility remains relatively low, which is generally supportive of a bullish market environment. Lower volatility often encourages investors to buy at higher levels, as it suggests a less turbulent market.
In the options market, data provided additional insights into potential trading ranges and market sentiment. The Maximum Call Open Interest (OI) was observed at the 26,000 and 25,500 strike prices, indicating that these levels are where the most call options are being held, potentially acting as resistance. Conversely, the Maximum Put OI was noted at the 25,000 and 24,000 strike prices, suggesting that these levels are likely to provide support as they represent areas where investors are most willing to buy insurance against a market drop.
Furthermore, Call writing (selling of call options, indicating expectations of limited upside) was seen at the 26,100 and 25,500 strike prices, while Put writing (selling of put options, indicating confidence in downside protection) was noted at the 25,000 and 24,900 strike prices. This options data suggests that the broader trading range for Nifty could be between 24,600 and 25,500, with a more immediate range likely between 24,800 and 25,300.
Turning to the Bank Nifty, another key index that tracks the performance of major banking stocks, the outlook was similarly positive. According to Taparia, the Bank Nifty opened on a strong note and extended its gains, reaching towards the 51,300 level in the first half of the session. The index then entered a consolidation phase, fluctuating between 51,100 and 51,300 levels, before ending the day with a gain of around 200 points, closing near 51,150.
For the Bank Nifty to continue its upward movement, Taparia emphasized the need for the index to hold above the 51,000 zone. If this level is maintained, the Bank Nifty could potentially move towards the next resistance levels at 51,350 and 51,500. On the downside, support is identified at 50,800 and 50,650 levels, where buying interest might emerge if the index dips.
Chandan Taparia highlighted three stocks
As for individual stock recommendations for the following trading day, August 27, Chandan Taparia highlighted three stocks that he believes are well-positioned for gains: HCL Tech, National Aluminium Company (National Alum), and Indian Hotels.
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HCL Tech: Taparia recommends buying HCL Tech at ₹1,719, with a target price of ₹1,820 and a stop loss at ₹1,670. The stock has formed a Pole and Flag pattern on the daily chart, which is a bullish continuation pattern. This breakout, supported by high buying volumes, suggests a strong uptrend. Additionally, the Average Directional Index (ADX) line has turned upwards, and the Positive Directional Index (DI) is above the Negative DI, indicating that the bullish trend has strength.
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National Aluminium Company (National Alum): Taparia suggests buying National Alum at ₹181, with a target price of ₹195 and a stop loss at ₹175. The stock has been inching upwards after retesting its support level, indicating a potential trend reversal. The Moving Average Convergence Divergence (MACD) line has crossed above the signal line, a bullish indicator, suggesting that the stock has gained positive momentum.
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Indian Hotels: Taparia recommends buying Indian Hotels at ₹661, with a target price of ₹700 and a stop loss at ₹640. The stock has broken out of a symmetrical triangle pattern on the daily chart, supported by higher-than-average buying volumes. The Relative Strength Index (RSI), which measures the momentum of a stock, has turned upwards from the centerline, indicating that there is room for the stock to move higher.
In summary, Monday’s trading session was marked by strong performances across the Indian stock market, driven by positive global cues and technical factors. The Nifty and Bank Nifty indices both showed bullish tendencies, supported by favorable market conditions and investor sentiment. With strategic levels identified for both indices and specific stock recommendations provided, investors have a clear roadmap for potential opportunities in the market as they head into the next trading session.