F&O data suggests long build-up in Apollo Tyres

The stock of Apollo Tyres Limited has given a downward sloping trendline breakout on the daily timeframe. The stock has formed a sizeable bullish candle on the breakout day, which adds further strength to the breakout.     

Besides, the stock also witnessed a robust volume of over three times the 50-day average volume, indicating a strong buying interest by the market participants. The 50-day average volume was 90.06 lakh, while on Monday, the stock had witnessed a total volume of 2.78 crore.   

The derivatives data is also suggesting a long build-up in the stock. On Wednesday, January series stock future saw 18,90,000 addition of open interest, which is 15.63 per cent addition in the open interest. It indicates that there is a long build-up in the market. January month’s current open interest is 1,39,80,000. For January expiry, the open interest wise put-call ratio (PCR) is at 0.53.  

The maximum put open interest was seen at 180 strikes, followed by 190 strikes while the maximum call open interest was at 200 strikes, followed by 210 strikes. The options data indicates that the stock is likely to trade in an immediate range of Rs 190 to Rs 210 in the coming session.  

Talking about momentum indicators, 14-period RSI is in a rising mode on both the weekly and the daily timeframes. The stochastic has given a positive crossover on the daily chart and the MACD is indicating bullish momentum. Moreover, the stock is trading above its short and long-term moving averages. These moving averages are exactly in the desired sequence, which suggests that the trend is strong.   

Going ahead, we expect the bias to remain positive as long as the stock sustains above its 20-day EMA level, which is currently quoting at Rs 187.50 level. On the higher side, the level of Rs 205 would be seen as an immediate resistance for the stock.