By Rajesh Palviya
Nifty closed at an all-time high of 17324 with a gain of 618 points on a weekly basis. On the weekly chart the index has formed a long bullish candle forming higher High-low compared to previous week and has closed above previous week’s high indicating positive bias. 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 17400 level it would witness buying which would lead the index towards 17500-17700 levels. However, if the index breaks below 17200 level it would witness selling which would take the index towards 17050-16900.
Nifty is trading above the 20 and 50 day SMA which is an important short-term moving average, 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 to trade in the range of 17700-17100 with a positive bias.
The weekly strength indicator RSI is above its respective reference lines indicating positive bias.
Nifty Derivative Outlook
Nifty futures closed at 17329.35 on a positive note with 11.02% increase in open interest and with price gains of 3.66% indicating Long Build-Up. The open interest position of FIIs in Index Futures is at Rs 15.764 increased by 1,212 crore and in Stock Futures it is at Rs 123993 increased by 11,171 crore. PCR OI currently is at 1.35 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 17,200 followed by 17,000 & 16,500 and resistance at 17,500 levels followed by 17,800 & 18,000 .Nifty Option chain data suggest that 17, 000, 17,500 & 17,300 strike CALL and 17,300 strike Put followed by 17,000 & 16,500 strike has high open interest concentration which suggests that Nifty is likely to trade in range of 17000-17500 level for the coming week; with 17,300 acting as a pivotal level as both Call & Put have high OI concentration at 17,300 strike price.
Bank Nifty Outlook
Bank Nifty started the week on a flat note and buying momentum for the most part of the week led it to close on a positive note. Bank Nifty closed at 36761 with a gain of 1133 points on a weekly basis.
On the weekly chart the index has formed a sizable bullish candle forming higher High-low compared to previous session indicating positive bias. 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 37200 level it would witness buying which would lead the index towards 37500-37800 levels. However if the index breaks below 36400 level it would witness selling which would take the index towards 36200-35700. 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 37800-36200 with a positive bias.
The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias.
Bank Nifty Derivative Outlook
Bank Nifty futures closed at 36899.75 on a positive note with 27.98% increase in open interest and with price gains of 3.29% on weekly basis indicating Long Build Up. Bank Nifty has a strong support at 35,000; as 35,000 Put strike is having high OI concentration followed by 35,500 & 36,000 while on the Call front 38,000CE strike has high OI concentration indicating strong resistance level followed by 37,500 & 37,000. FII activity in Stock futures had been on BUY side during the last week.
Sectors and stocks to watch in short term
We expect IT, chemical, reality, FMCG, oil & gas sectors may show strength while pharma, automobile, power sectors remain in consolidation mode. We expect stocks like Reliance Industries Ltd (RIL), Tata Consultancy Services (TCS), Deepak Nitrite, Havells India, Godrej Consumer Products, Brigade Enterprises, ONGC, ICICI Bank, Eicher Motors, Aurobindo Pharma can show strength in near term.
(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s own. Please consult your financial advisor before investing.)