By Rajesh Palviya
Last week Nifty ended on a flat note, closing at 15856 with a loss of 67 points on a weekly basis. On the weekly chart the index has formed a Bullish candle with a lengthy reduced shadow indicating acquiring at reduced levels. Nifty has formed reduced higher low formation on weekly chart. On the everyday chart Nifty has formed Doji Candle which indicates indecisiveness amongst the participants, the index is consolidating inside the variety of 15600 – 15900 because last 6-7 weeks indicating sideways trend.
The chart pattern suggests that if Nifty crosses and sustains above 15950 level it would witness acquiring which would lead the index towards 16100-16300 levels. However, if the index breaks under 15700 level it would witness promoting which would take the index towards 15500-15400. Nifty is trading above 20 and 50 day SMAs which are vital quick term moving averages, indicating positive bias in the quick term. Nifty is anticipated to stay in an uptrend to sideways zone till it breaks 15600 on the downside. For the week, we count on Nifty to trade in the variety of 16050-15550 with a mix bias.
The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias. However momentum oscillator Stochastic has turned damaging from the overbought zone indicating a probable consolidation or a down move in the close to term
Nifty Derivative Outlook
Nifty in the existing week has seen Long Unwinding with a cost reduce of 83 points (-.52%) and OI shedding of 11.42 lakh shares(-12.08%) decreasing from 94.57 lakh share to 83.15 lakh shares. Nifty traded at a discount of -3 points compared to premium of 13 points, when the sentiment indicator Computer Ratio is at the moment trading at 1.15 which is above the median line but in a comfy zone indicating positive bias.
In Nifty the higher OI on the Get in touch with side in the month-to-month expiry scheduled on 29th July is at 16,000(61.20 lakh), 15,900(42.01 lakh) & 16,one hundred(33.25 lakh) strike, with 16,000 & 15,900 acting as a sturdy resistance wherein there has been writing of 17.60 lakh shares & 15.27 lakh shares respectively. The higher OI on the Place side is at 15,800(44.39 lakh), 15,500(36.65 lakh) & 15,700(29.79 lakh) strike, with 15,800 & 15,850 acting as a sturdy help as there has been of writing of 18.84 lakh shares & 10.14 lakh shares respectively so vital levels to watch for will be 15800 wherein if Nifty sustains under 15800 it can move till 15700 & 15500 when on the other side if sustains above 15900 can test 16000 & 16200 levels. The tentative variety for the existing week is probably to be among 15,500 to 16,000. India VIX, indicator of market place volatility, is at the moment at 11.76% up by .49% on weekly basis but continues to trade close to the lowest levels because last 1 year indicating sturdy conviction and stability in existing market place trend and additional descend from these levels will augment for more of an uptrend in the market place.
Bank Nifty Outlook
Bank Nifty began the week on a damaging note and remained damaging in initial half even so Friday’s sturdy gains pulled index greater to finish on flat note. Bank Nifty closed at 35034 with a loss of 716 points on a weekly basis.
On the weekly chart the index has formed a Bearish candle with a lengthy reduced shadow indicating acquiring at reduced levels. On the everyday chart, the index is consolidating inside the variety of 34000 – 36000 indicating a sideways trend. The chart pattern suggests that if Bank Nifty crosses and sustains above 35400 level it would witness acquiring which would lead the index towards 35800-36200 levels. However if index breaks under 34400 level it would witness promoting which would take the index towards 34000-33700. Bank Nifty is now effectively placed above its 20 SMA indicating positive bias in the quick term. Bank Nifty continues to stay in an uptrend in the medium term, so acquiring on dips continues to be our preferred approach. For the week, we count on Bank Nifty to trade in the variety of 34300-36000 with mixed bias.
The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias. However momentum oscillator Stochastic has turned damaging from the overbought zone indicating a probable consolidation or a down move in the close to term
Bank Nifty Derivative Outlook
Bank Nifty in existing week has seen Long Unwinding with a cost reduce of -816 points (-2.27%) and OI shedding of 5.71 lakh shares (-27.65%) decreasing from 20.66 lakh share to 14.95 lakh shares and traded at premium of 7 points compared to 105 points. In Bank Nifty the higher OI on the Get in touch with side in the month-to-month expiry scheduled on 29th July is at 36,000 (12.53 lakh), 36,500 (9.85 lakh) & 35,500(10.94 lakh) strike, with 36,000 & 35,700 acting as a sturdy resistance wherein there has been writing of 2.39 lakh shares & 1.71 lakh shares respectively. The higher OI concentration on the Place side is at 34,500 (10.41 lakh), 34,000 (10.47 lakh) & 33,500 (6.89 lakh) strike, with 34,800 & 34,500 acting as a sturdy help as there has been of writing of 4.40 lakh shares & 4.07 lakh shares respectively when the vital level to watch for will be 35000 as each get in touch with & place have highest OI concentration of 13.80 lakh & 11.29 lakh shares respectively. There has been addition of 3.36 lakh shares in 35000 Put & in 35100 Call there has been addition of 2.39 lakh shares clearly indicating that 35000 – 35100 are probably to act as a decisive level for next week and any sustain move above the similar can assistance Bank Nifty attain 35500 to 36000 levels & on the contrary if banknifty fails to prop up this levels it may possibly test 34500 to 34000. The tentative variety for the next week is probably to be among 34,000 to 36,000.
Nifty Strategy for this week
Traders can initiate a Moderately Bullish approach with decreased premium outflow & reduced breakeven point named BULL Get in touch with SPREAD of 29th July Expiry wherein trader will acquire one lot of 15,850 get in touch with strike at 81 and simultaneously sell one lot of 16,000 get in touch with strike at 23, so that net outflow or maximum loss will be restricted to upto Rs 2,900 (58 points).Nifty on expiry if closes above 15,908 the approach will commence generating profit, even so as the threat is restricted so is the profit also restricted. The maximum gains will be restricted up to Rs 4,600 (92 points) only since the gains of lengthy 15,850 strike get in touch with will be offset by the sold 16,000 strike get in touch with if Nifty closes above 16,000 on expiry.
Sectors and stocks to watch this week:
We count on the IT, Pharma, Metal, Realty and Cement sectors to do effectively in the close to term. Stocks like Infosys, Tech Mahindra, Wipro, Lupin, Aarti Drugs, Jindal Stainless, Tata Steel, DLF, Prestige Estates Projects, Laxmi Organics, ACC and Ambuja Cements can do effectively in the close to term.
(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s personal. Please seek advice from your economic advisor just before investing.)
