Day Trading Guide: 2 stock recommendations for Wednesday

The Nifty-50 index ended trade marginally in the green with gains of 53 points led by a late short-covering rally as bulls defended the 78.6% Fibonacci retracement level at 17,040, which also happened to be the trendline support formed joining recent lows.

Further, the index formed a dragonfly Doji suggesting aggressive buying at lower levels. A sustained trade beyond 17,315 in the coming sessions will extend the up-move taking the index higher to levels of 17,450-17,600.

However, failure to cross and sustain beyond 17,315 may resume the choppy, volatile and corrective moves dragging the index to levels of 17,000-16,800. Moreover, RSI has currently taken support at the 40 levels after reversing from the 55 levels earlier, suggesting that the index has entered a sideways consolidation phase and volatility is high within this trading range.


Traders should also keep a close eye on the Indian VIX, which has closed below the 20 mark. A move back above 20 may trigger increased volatility in the markets.

Recommendations
CIPLA
Buy@CMP: Rs 948
Target: Rs 990
Stop Loss: Rs 927

The stock has turned upwards after taking support at the 200-DMA placed at 926 levels. Further, it is on the verge of a breakout from a narrow channel pattern neckline placed at 960. A sustained trade beyond this resistance will resume the uptrend taking it higher to levels of 990. RSI is also favouring a bullish trend.

CADILA HEALTHCARE
Buy@CMP: Rs 400
Target: Rs 425
Stop Loss: Rs 385

The stock has turned upwards after taking support at the 61.8% Fibonacci retracement level paced at 395. Further, it has turned upwards after reaching the oversold zone and testing 200-WMA suggesting a short-covering rally could be on the cards. Further, RSI has also formed a higher low after a positive divergence confirming immediate bullishness.

(The author is CMT, Technical Analyst – Research , YES SECURITIES)