By Rajesh Palviya
Nifty closed at 17895 with a gain of 277 points on a weekly basis. On the weekly chart, the index has formed a bullish candle however it has remained restricted within the previous week’s High-Low range representing a short term breather. The index is moving in a Higher Top and Higher Bottom formation on the weekly chart indicating positive bias. The chart pattern suggests that if Nifty crosses and sustains above 17950 level it would witness buying which would lead the index towards 18100-18300 levels.
However, if index breaks below 17750 level it would witness selling which would take the index towards 17600-17400. Nifty is trading above 20 and 50 day SMAs which are important short term moving averages, indicating positive bias in the short term. Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Nifty 50 to trade in the range of 18300-17600 with a positive bias.
The weekly strength indicator RSI has turned bullish along with positive crossover which signals rising strength.
Nifty derivative outlook
Nifty futures closed at 17900, on a positive note with 5.82% increase in open interest and price gain of 2.11% indicating Long Build Up. Nifty annualized volatility index, India Vix, has decreased to 15.65% from 17.21% down by (-)9.05%. PCR OI currently is at 1.30 levels which is above the median line and in a comfortable zone indicating positive bias in the market.
Options Built up shows that for now Nifty has strong support at 17,500 followed by 17,200 and 17,800 and resistance at 18,000 levels followed by 18,500 & 18,200. 17,900, 18,000 and 18,500 strike CALL and 17,500 strike Put followed by 17,000 & 17,200 strike has high open interest concentration which suggests that Nifty is likely to trade between these levels of 18,200 on upside and 17,500 on downside for the coming week with 17,800 acting as a pivotal levels.
Bank Nifty Technical Outlook
Bank Nifty started the week with an upward gap and buying momentum for the most part of the week led it to close in positive territory. Bank Nifty closed at 37775 with a gain of 350 points on a weekly basis.
On the weekly chart index has formed a bullish candle and remained restricted within previous week’s High-Low range indicating lack of strength on either side. The index is moving in a Higher Top and Higher Bottom formation on the weekly chart indicating sustained up trend on long term charts. The chart pattern suggests that if Bank Nifty crosses and sustains above 38100 levels it would witness buying which would lead the index towards 38500-38800 levels. However if index breaks below 37500 level it would witness selling which would take the index towards 37000-36200. Bank Nifty is trading above 20, 50, and 100 day SMAs which are important short term moving averages, indicating positive bias in the short to medium term. Bank Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 38500-37000 with a positive bias.
The weekly strength indicator RSI has turned positive and sustaining above its respective reference line indicating positive bias.
Bank Nifty Derivative Outlook
Bank Nifty futures closed at 37917.05 on a positive note with (-)13.60% decrease in open interest and with a price gain of 1.50% indicating Short Covering. The open interest position of FII’s in Index Futures is at Rs 11,475 decreased by (-)3,307 crore and in Stock Futures it is at Rs 1,24,695 increased by 6,487 crore. Bank Nifty has a strong support at 37,500; as 37,500 Put strike is having high OI concentration followed by 37,000 & 36,000 while on the Call front 38,500CE strike has high OI concentration indicating strong resistance level followed by 39,000 & 39,500,while 38,000 is likely to act as a pivotal level.
Sectors, stocks to watch this week
We expect chemical, IT, banking, power, telecom and automobiles to do well in the near term. Stocks such as Reliance Industries Ltd (RIL), Tata Chemicals, Bank of Baroda, Canara Bank, Uflex, Nocil, HCL Technologies, Infosys, Mcdowell, Adani Port, Tata Power, Tata Motors to do well in near term.
(Rajesh Palviya, VP– Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)