Swing Trading Guide: 2 Buy/Sell Stock Recommendations By VLA Ambala On Wednesday, 5th June

As expected the latest session turned out to be the most volatile day in intraday as the day rolled to witness Lok Sabha Election vote counting. During the session on Tuesday, the benchmark index Nifty was seen trading in a wide range of 8.25% and concluded the day by plunging 5.935%.

"Following the final results, we expect the next trading session to be very volatile, as suggested by the volatility indicator VIX, which was at 31.71 at the beginning of the session and ended at 25.89. Considering these aspects and prevailing market movements, we can expect a big gap opening in the next trading session. In fact, we expect the market to trade within a wide range in the next two days. Hence, I recommend adopting a neutral trading strategy and waiting for the market to stabilize," said V.L.A. Ambala, a Research Analyst (SEBI Registered), Co-founder - Stock Market Today (SMT).

Market View For 5 June 2024

"For the Nifty index, the key support levels for the next trading session will be between 20800 and 20500, whereas resistance will likely be noticed between 22500 and 22800. On the other hand, the Banking Index could find key support between 45800 and 45000, and witness 47900 and 48500, acting as their major resistance points," she added.

Market Outlook

"Historically, the stock market sees volatility during elections and before election results. In this election, exit poll expectations triggered a price gap-up in intraday, which followed a price surge in the previous market session. However, this decline is not a shock as price charts had already hinted at an overbought situation, with a recent technical pattern forming a 'Dark Cloud Cover.' In addition, the index valuation also surged over 70 on the daily, weekly, and monthly timeframes. Historically, when price levels touch the overbought level in daily and higher timeframes, a correction is bound to occur. In these situations, in the short-term intraday, the Nifty index could undergo a correction as it approaches expiry on 6th June. During such movements, traders can adopt 'at the money' strangle or straddle strategies, where they could avail a risk-reward premium ratio of 1:3 to 1:4," VLA Ambala commented.

"Positional traders may also follow a neutral strangle or straddle strategy in the index. Future traders with a term of 10-15 days may also approach their covered position with a bearish view. I also recommend hedging portfolios and covering with F&O, index, mid-cap, and large-cap based on the portfolio's orientation. In fact, I'd advise following a wait-and-watch strategy to make the most of a potential 10-15% correction that could bring lucrative dip buying opportunities. Meanwhile, long-term and mid-term investors should prepare for a potential correction of over 10% to allocate 25% of their funds and plan to deploy another 25% when they observe an additional dip of 4-5%. The market could offer buying opportunities in stocks with potential or that have surged significantly. So, I advise approaching quality stocks like the top 10 losers of the latest session with a strangle or straddle position." said VLA Ambala, SEBI Registered RA and Co-Founder of SMT.

Stocks To Buy Today

V.L.A. Ambala has recommended 2 swing trading stocks to buy or sell on Wednesday, 5th June.

SPARC

• BUY: Rs. 200
• TARGET: Rs. 220-235
• STOP LOSS: Rs. 185

RAILTEL

• SELL: Rs. 400-410
• TARGET: Rs. 365-345
• STOP LOSS: Rs. 415

Note: V.L.A. Ambala emphasizes that these recommendations are based on price movement, past behavior, and technical analysis.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.