Stock picks of the day: Avoid creating short positions; use volatility to buy stocks

Nifty on the daily chart has formed a bullish candle followed by an Inside Day candle on the daily charts. The volatility is likely to remain high in the coming sessions as we approach the outcome of the General Election.

In the current corrective phase, the Nifty has lost 650 points in the last 11 sessions, leading stochastic oscillator to approach oversold territory (at 15). 

Therefore, we advise traders to avoid creating a fresh short position at the current level. Going ahead we expect the index to enter a base formation in the broad range of 11000-11300, and eventually extend the up move towards 11500 levels being the 50% retracement of the entire decline (11856-11108).

Nifty has major support around 11000-10900 levels. Historically, anxiety around General Elections has always triggered volatility in the past. However, markets always steer clear of it once anxiety settles down, irrespective of the outcome.