By Rajesh Palviya
Nifty closed at 15722 with a loss of 138 points on a weekly basis. On the weekly chart, index has formed a bearish candle and remains inside a variety of 15900-15400 indicating indecisiveness amongst the marketplace participants. 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 15800 level it would witness shopping for which would lead the index towards 15900-16300 levels. However, if the index breaks under 15600 level it would witness promoting which would take the index towards 15400-15300. Nifty is now properly placed above its 50 and one hundred SMA 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 16100-15600 with mixed bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have each turned unfavorable and are under their respective reference lines indicating unfavorable bias
Nifty derivative outlook
Nifty in the existing week has seen Long Unwinding with a price tag reduce of -146 points (-.92%) and OI shedding of -3.13 lac shares(-3.26%) decreasing from 96.12Lac share to 92.98Lac shares. Nifty traded at a premium of 19 points compared to 28 points, when the sentiment indicator Computer Ratio is at present trading at 1.09 which is above the median line and in a comfy zone indicating positive bias. In Nifty the higher OI on the Get in touch with side in the weekly expiry scheduled 8th July is at 15,800(42.26L), 16,000(31.88L) & 15,700(28.59L) strike, with 16,300 & 15,800 acting as a robust resistance wherein there has been writing of 14.66Lac shares & 11.75Lac shares respectively. The higher OI on the Place side is at 15,700(27.57L), 15,500(27.36L) & 15,600(27.20L) strike, with 15,600 & 15,500 acting as a robust assistance as there has been of writing of 12.13Lac shares & 6.77Lac shares respectively when the pivotal level will be 15700 due higher OI concentration on each the sides ie Call & Put.
The tentative variety for the existing week is probably to be involving 15,500 to 16,000. India VIX, indicator of marketplace volatility is at present at 12.08% down by 9.56% on weekly basis is virtually close to the lowest levels because last one year indicating robust self-assurance and stability in existing marketplace trend and additional descent from these levels will augment for more of an uptrend in the marketplace.
Bank Nifty Outlook
Bank Nifty closed at 34810 with a loss of 555 points on a weekly basis. On the weekly chart index has formed a bearish candle and remains inside a variety of 35700-33900 indicating indecisiveness amongst the marketplace participants. Since the previous 5-6 weeks, index is consolidating inside 35800-33900 levels indicating quick term consolidation. Hence any either side breakout will indicate additional path.
The chart pattern suggests that if Bank Nifty crosses and sustains above 35000 levels it would witness shopping for which would lead the index towards 35500-36300 levels. However if index breaks under 34500 level it would witness promoting which would take the index towards 34000-33000. Bank Nifty is trading above 50 and one hundred day SMAs which are significant quick term moving averages, indicating positive bias in the quick term. Bank Nifty continues to stay in an uptrend in the medium term, so shopping for on dips continues to be our preferred tactic. For the week, we count on Bank Nifty to trade in the variety of 36000-34000 with mixed bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have each turned unfavorable and are under their respective reference lines indicating unfavorable bias.
Bank Nifty Derivative Outlook
Bank Nifty in existing week has seen Short Build Up with a price tag reduce of -537 points (-1.51%) and OI addition of 1.45lac shares (-7.48%) escalating from 19.39Lac share to 20.84Lac shares and traded at premium of 142 points compared to 124 points. In Bank Nifty the higher OI on the Get in touch with side in the weekly expiry scheduled 8th July is at 35,000(11.35L), 35,500(11.26L) & 36,000(9.54L) strike, with 35,500 & 36,000 acting as a robust resistance wherein there has been writing of 4.91Lac shares & 3.45Lac shares respectively. The higher OI concentration on the Place side is at 34,500(8.39L), 34,000(8.29L) & 33,500(5.37L) strike, with 34,700 & 34,800 acting as a robust assistance as there has been of writing of 3.52Lac shares & 3.49Lac shares respectively. The tentative variety for the existing week is probably to be involving 34,000 to 35,500.
Nifty Strategy
Nifty is at present close to assistance zone and as the big trend is positive the tactic which we are suggesting for the week is a moderately bullish tactic wherein traders wanting to take calculated dangers could initiate this spread, involving shopping for & promoting of calls getting higher OI concentration and expiring on 8th july 2021. With India Vix trading at 12.09% at lowest levels because April 2020 and Put writing intact at reduced levels providing assistance, indicating all round tone of marketplace to be bullish.
In this tactic trader will purchase one lot of 15700 Get in touch with strike at 88 and simultaneously sell one lot of 15900 Get in touch with strike at 17, so that net outflow or maximum loss will be restricted to up to Rs 5,300 (71 points), when on the other side profit will also be restricted maximum to Rs 9,700 (129 points).One of the disadvantage of the tactic is that gains are capped no matter how higher the marketplace breaks out so If Nifty expires at 15,700 or under that the whole premium of 71 points (Rs 5,300) could be lost and if Nifty expires at 15,900 or above on expiry the max obtain generated will be 129 points (Rs 9,700) when tactic will get started displaying earnings after Nifty closes above 15,771 levels.
Sectors and stocks in focus this week
We count on the IT, Pharma and Healthcare, Chemical, FMCG, Banking and economic sectors to show bullishness in coming trading sessions. One can focus on stocks like Infosys, Tech Mahindra, Aurobindo Pharma,Dr Reddy’s Laboratories, Glenmark Pharmaceuticals, ICICI Bank, Deepak Nitrite, Laxmi Organic Industries, PI Industries, Dabur India can do properly 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 economic advisor just before investing.)