By Rajesh Palviya
Nifty closed at 16705 with a achieve of 255 points on a weekly basis. On the weekly chart, the index has formed a Bullish candle with a lengthy decrease shadow indicating purchasing at decrease levels. The index is moving in a Higher Top and Higher Bottom formation on the weekly chart indicating a sustained uptrend.
The chart pattern suggests that if Nifty crosses and sustains above 16750 level it would witness purchasing which would lead the index towards 16800-17000 levels. However, if the index breaks beneath the 16500 level it would witness profit booking which would take the index towards 16300-16200. Nifty is trading above 20 and 50 day SMA’s which are critical quick-term moving averages, indicating positive bias in the quick term. Nifty continues to stay in an uptrend in the medium term, so purchasing on dips continues to be our preferred approach. For the week, we count on Nifty to trade in the variety of 17000-16300 with a positive bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have each are in bullish mode and are above their respective reference lines indicating positive bias.
India VIX index is at 13.40 v/s 13.46. Nifty ATM get in touch with solution IV is at present 9.18 whereas Nifty ATM place solution IV is quoting at 12.48. Index choices PCR is at 1.40 v/s 1.23 & F&O Total PCR is at .87.
Bank Nifty outlook
Bank Nifty began the week on flat note and purchasing momentum for most component of the week led it to close on a positive note. Bank Nifty closed at 35628 with a achieve of 594 points on a weekly basis.
On the weekly chart the index has formed a modest Bullish candle with shadows on either side indicating indecisiveness amongst participants concerning the path. For the previous 3 months, the index is consolidating inside 36300-34000 levels indicating quick term sideways trend. Hence any either side breakout will indicate additional path. The chart pattern suggests that if Bank Nifty crosses and sustains above 35800 level it would witness purchasing which would lead the index towards 36000-36500 levels. However, if index breaks beneath 35000 level it would witness promoting which would take the index towards 34500-34000 levels.
Bank Nifty is now effectively placed above its 50 and one hundred SMA indicating positive bias in the quick term. Bank Nifty continues to extend its sideways trend for quick to medium term, therefore any either side breakout will signal additional path. For the week, we count on Bank Nifty to trade in the variety of 36300-34500 with a mixed bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have each turned unfavorable and are beneath their respective reference lines indicating unfavorable bias.
Sectors and stocks to watch this week
We count on the IT, Capital Goods, Chemicals, FMCG and Cement sectors to do effectively in the close to term. Stocks like Mindtree, Wipro, Tech Mahindra, Bata India, L&T, Siemens, ICICI Bank, Bajaj Finance, Reliance Industries Ltd (RIL), Navin Fluorine can do effectively in 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 the advice of your monetary advisor just before investing.)