By Rajesh Palviya
Nifty opened with an upward gap and promoting stress in the 1st half dragged the index on Friday. However some obtaining assistance along at decrease levels recovered some of the earlier losses to close on a flat note. The everyday price tag action has formed a bearish candle carrying decrease shadow indicating obtaining assistance at decrease levels. The Nifty closed at 14681 with a loss of 19 points (-.13%)
On the weekly chart index has formed a bearish candle forming greater High-Low formation indicating positive bias. Since the previous 8-9 weeks, the index has been consolidating inside a broad variety of 15000-14200 levels representing quick term sideways trend. The chart pattern suggests that if Nifty crosses and sustains above 14800 level it would witness obtaining which would lead the index towards 15000-15250 levels. Important Support for the week is about 14400-14200. Nifty is now nicely placed above its one hundred SMA indicating positive bias in the quick term. Nifty continues to stay in an uptrend in the medium term, so obtaining on dips continues to be our preferred technique. For the week, we count on Nifty to trade in the variety of 15000-14400 with mixed bias. IndiaVix is at present at 20.27 % and has been in a downward trajectory from its current higher of 24.54% suggesting self-confidence and stability in existing industry trend and additional descend from these levels will augment for more of an uptrend in industry.
The weekly strength indicator RSI is moving downwards and is quoting beneath its reference line indicating unfavorable bias. However momentum oscillator Stochastic has turned positive from the oversold zone indicating a attainable consolidation or a up-move in the close to term
Nifty derivative outlook
Nifty in existing expiry has seen Short create up with a price tag reduce of -1.46% and OI addition of 21 lac shares growing from 102.38 Lac share to 123.24 Lac shares . The sentiment indicator Computer Ratio is at present trading at 1.11 above the median line but nonetheless in a comfy zone indicating positive bias. In Nifty the higher OI on the Contact side in the weekly expiry scheduled 20th May is at 14,900, 15,000 & 15,300 strike, with 14,900 & 15,000 acting as a robust resistance wherein there has been writing of 16.13Lac shares & 16.80 Lac shares respectively. The higher OI on the Place side is at 14,500 -14,600 & 14,700 strike, with 14,600 & 14,400 acting as a robust assistance as there has been of writing of 12.20Lac shares & 10 Lac shares respectively. The tentative variety for the existing week is probably to be amongst 14,400 to 15,000. Fiis compared to last week have decreased their Future Index Long position by 8,545 contracts & have improved their Future Index Short by 15,964 contracts compared to
Bank Nifty outlook
Bank Nifty began the week on a flat note and remained unfavorable all through the week. Bank Nifty closed at 32170 with a loss of 735 points on a weekly basis.
On the weekly chart index has formed a bearish candle and has remained restricted inside prior week’s High-Low variety which signals indecision at existing levels. Since the previous couple of weeks, the index has been consolidating inside 34000-31800 levels indicating quick term consolidation. Hence any either side breakouts will indicate additional path. The chart pattern suggests that if Bank Nifty crosses and sustains above 33000 level it would witness obtaining which would lead the index towards 33500-34500 levels. However if the index breaks beneath 31900 level it would witness promoting which would take the index towards 31500-30700. Bank Nifty is trading beneath 20, 50, and one hundred day SMAs which are essential quick term moving averages, indicating unfavorable bias in the quick to medium term. Bank Nifty continues to stay in an uptrend in the medium term, so obtaining on dips continues to be our preferred technique. For the week, we count on Bank Nifty to trade in the variety of 33500-31500 with mixed bias.
The weekly strength indicator RSI is moving downwards and is quoting beneath its reference line indicating unfavorable bias. However, momentum oscillator Stochastic has turned positive from the oversold zone indicating a attainable consolidation or an up-move in the close to term.
Bank Nifty derivative outlook
Banknifty also saw Short create up with price tag reduce of -4.56% & OI addition of 2.36 lac shares growing from 13.97 Lac to 16.34 Lac shares. In BankNifty the highest OI on the Contact side in the weekly expiry is at 32,500 -33,000 & 34,000 strike, with 33,000 acting as a robust resistance zone wherein there has been writing of 5.13Lac shares, whilst on the Place side highest OI is at 31,500 – 31,000 & 30,000 strike, with 32,500 acting as a pivotal level for this weekly expiry as there has been addition of 7.46Lac shares on Contact side & 2.54 Lac addition on Place side suggesting that any sustain move on either side of this level (32,500) will choose the trend in Banknifty.
Sectors and stocks to watch this week
We count on the IT, Pharma, FMCG, Fertiliser and Consumer tough sector to do nicely in the close to term. One can focus on stocks like Cipla, Lupin, PI Industries, Bata India, Wipro, Asian Paints, Pidilite Industries, Voltas for close to term bullish trend. Midcap space also appears eye-catching and we count on stocks like Great Eastern Shipping Co Ltd, Welspun India, Eris Lifesciences, Gujarat State Fertilizers Chemicals (GSFC) are probably to do nicely 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 the advice of your economic advisor just before investing.)