Vedanta demerger & HFCL dip: Anand James reveals how to trade this week's top stock triggers

Markets cracked a major bearish structure on Friday, fueled by a massive banking rally, but can the momentum sustain? While Nifty Bank eyes the 57,500 mark, stiff hurdles loom ahead for the broader market. From a looming relief rally in IT to navigating Vedanta’s high-profile demerger and HFCL’s sharp dip, Geojit’s Anand James breaks down this week's essential trading triggers.

Edited excerpts from a chat:

How do you read Friday's rally from a technical perspective? Will the upside extend this week?
A break of bearish structure has come to be, after Friday’s massive up move. That said, the swing higher from the lowest point of the month to the highest close this month appears too steep a move to go without a consolidation. This lends caution, and requires Nifty to stay above 23538, the 20-day SMA to remain upwardly mobile. Also, 23700 is a stiff barrier that had troubled May for several days, and is expected to pose a stiff challenge to further upside. And so will 24,000. In other words, despite the enthusiastic run up on Friday, several hurdles appear in the way of continuation of the same.

Banks were the top gainer in the week and IT the biggest loser. Do you think the positive momentum could spill over to the IT pack as well?
The Nifty IT index is nearing a strong horizontal support band in the 27,500-28,000 range, reinforced by an upward sloping trendline from earlier swing lows, forming a key confluence zone. The recent ~4% decline points to possible short-term fatigue in selling pressure, while momentum indicators such as an RSI close to 34 and a sharply negative MACD reflect stretched conditions that typically precede a mean-reversion move. This setup raises the likelihood of a near-term bounce or reversal.

Additionally, the average RSI across major IT constituents has slipped to around 30, and several stocks are displaying Doji and similar indecisive candlestick patterns, signaling potential exhaustion in the downtrend and hinting at a short-term pullback.

Derivative positioning continues to reflect a bearish bias, with nearly 60% of the stock futures witnessing fresh short build-up on Friday, which rises to around 70% on a week-on-week basis, indicating persistent selling pressure. In the options segment as well, sentiment remains skewed to the downside, with close to 60% of in-the-money call strikes and about 70% of out-of-the-money call strikes seeing short additions, suggesting traders are actively positioning for limited upside and potential weakness ahead. So, any upside move may initially be a relief rally rather than a confirmed trend reversal.

How would Nifty Bank? Is it headed towards 57,500-level tested earlier in April?
The Nifty Bank Index is displaying a strong bullish setup across multiple timeframes, supported by both price action and momentum indicators. On the weekly chart, the formation of a Bullish Marubozu signals strong buying conviction, further reinforced by a MACD bullish signal crossover, indicating a shift in medium-term momentum.

On the daily timeframe, the index has confirmed a range breakout, suggesting continuation of the upward move. With the index already trading near 56,800, there is a fair probability of it testing the 57,500 in the coming session. Momentum remains supportive, with the average RSI of key constituents hovering around 55, reflecting healthy strength without being overbought.

From a stock-specific standpoint, heavyweight constituents such as HDFC Bank, ICICI Bank, SBI, and Axis Bank have all registered strong weekly reversal candles, with most forming bullish Marubozus, highlighting broad-based participation. Derivative data also supports the bullish undertone, with nearly 65% of out-of-the-money put strikes witnessing fresh short build-up, while a similar proportion of out-of-the-money call strikes has seen long additions, reflecting strengthening directional bias.

Additionally, in the broader futures segment, close to 80% of stock futures recorded either long build-up or short covering on Friday, indicating improving sentiment and broad-based participation on the long side. This alignment of index structure and constituent strength points toward sustained upside, making dips a potential buying opportunity in the near term.

Aegis Logistics was the top gainer in the week amid hopes of easing tensions in the Strait of Hormuz. Can those who missed the rally still trade?
Yes, we believe so. Friday’s muted rise has come against the run of the play, considering the large rise on the previous day, and by Nifty on Friday. This is largely because the stock is now a significant resistance that had resisted upsides since July 2024. Oscillators agree with the exhaustion signals. With this in the backdrop, those aiming to re enter the consequent dips would do well to keep stop loss in the 880 vicinity.

HFCL shares fell 15% in the week amid profit booking. Good time to buy the dip?
HFCL’s decline is not surprising as an evening star pattern had signalled the same at the start of the month. However, this correction appears to have run its course, as indicated by a hammer on Thursday, followed by a close back above the 20 day SMA. Fresh longs may be attempted with stop loss near 168 or 162, upside expectations may be limited to 188.

Vedanta shares would be in limelight on Monday as 4 demerged entities will debut on exchanges. How to trade?
While all the attention shifts to the demerged entities, Vedanta’s upside objectives may be set at Rs 316-326, but such hopes will be deflated on pull back below Rs 305.

Give us your top ideas for the week

DREDGECORP (1084)
View: Buy
Target: 1155
SL: 1019

Dredging Corporation is showing early signs of a technical reversal after correcting into a key support zone. The stock has approached the 61.8% Fibonacci retracement level, where it has formed a Pinbar Doji type candlestick, indicating rejection of lower levels and a potential shift in near-term sentiment. This price action suggests that selling pressure is easing, with buyers stepping in at important support.

Momentum indicators also hint at stabilization after the recent decline, supporting the case for a bounce. The confluence of a strong Fibonacci support and reversal candlestick increases the probability of an upward move. As long as the stock sustains above this zone, a pullback towards 1,155 looks achievable in the near term.

From a risk management perspective, a stop loss at 1,019 should be maintained to protect against a breakdown below recent support.

TRITURBINE (671)
View: Buy
Target: 690-720
SL: 649

Triveni Turbine is showing signs of a short-term bullish reversal following a recent phase of consolidation. The stock has formed a strong bullish Marubozu candle on the daily chart, indicating decisive buying interest and a shift in near-term sentiment. This price action suggests that buyers have regained control after the recent pullback.

On the momentum front, the MACD histogram is showing signs of exhaustion, with declining bearish bars hinting at a slowdown in downward momentum and a possible transition toward a positive crossover. This further supports the case for an upside move.

The current setup indicates a favorable risk-reward for a bounce, with the stock likely to move towards the 690-720 level in the near term.

From a risk management standpoint, a stop loss at 649 should be maintained to guard against any breakdown.