By Rajesh Palviya
Nifty closed at 16238 with a obtain of 475 points on a weekly basis. On the weekly chart the index has formed a lengthy bullish candle forming greater High-low compared to prior week and has decisively broken out its previous two months many resistance zone of 15900 levels on a closing basis. 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 16350 level it would witness acquiring which would lead the index towards 16500-16600 levels. However if index breaks under 16180 level it would witness profit booking which would take the index towards 16100-15900. Nifty is trading above 20 and 50 day SMA which are critical brief term moving averages, indicating positive bias in the brief term. Nifty continues to stay in an uptrend in the medium term, so acquiring on dips continues to be our preferred method. For the week, we count on Nifty to trade in the variety of 16500-16000 with a positive bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have each turned positive and are above their respective reference lines indicating positive bias.
Nifty Derivative Outlook
Nifty in present week has seen Long Build Up with a value obtain of 474 points (3.01%) and OI addition of 28.97 lakh shares (30.75%) escalating from 94.19Lac share to 123.17 lakh shares and traded at premium of 13 points compared to 14 points suggesting positive bias. The sentiment indicator Computer Ratio (Nifty) is at present trading at 1.40 which is above the median line but in a comfy zone for bullish momentum.
Nifty highest OI on the Contact side in the weekly expiry scheduled 12th August is at 16,300(34.80L), 16,400(31.17L) & 16,500(27.28L) strikes respectively wherein writing of 15.27 lakh shares was witnessed at 16,400 strike & 11.65 lakh shares of writing was seen at 15,550 strike indicating robust resistance zone at 16,500-16,550, whilst on the Place side highest OI is at 16,000(30.74L), 16,200 (29.24L) & 15,800 (22.17L) strikes wherein writing of 7.74 lakh & 7.19 lakh share was seen at 15,800 & 16,000 strikes respectively indicating a robust assistance zone. So, the most probable variety for the weekly expiry is probably to be among 16,000 to 16,500.
Bank Nifty Outlook
Bank Nifty began the week with an upward gap and acquiring momentum for most component of the week led it to close in positive territory. Bank Nifty closed at 35809 with a obtain of 1225 points on a weekly basis.
On the weekly chart the index has formed a sizable bullish candle forming greater High-low compared to prior week indicating positive bias. Since the previous 3 months, index is consolidating inside 36000-34000 levels indicating brief term consolidation. Hence any either side breakout will indicate additional path. The chart pattern suggests that if Bank Nifty crosses and sustains above 36000 level it would witness acquiring which would lead the index towards 36500-36800 levels.
However if the index breaks under 35600 level it would witness promoting which would take the index towards 35200-34500. Bank Nifty is trading above 20 , 50 and one hundred day SMAs which is an critical brief term moving typical, indicating positive bias in the brief term. Bank Nifty continues to stay in an uptrend in the medium term, so acquiring on dips continues to be our preferred method. For the week, we count on Bank Nifty to trade in the variety of 36800-35300 with a positive bias.
The weekly strength indicator RSI is in positive terrain and sustaining above its respective reference line indicating positive bias.
Bank Nifty Derivative Outlook
Bank Nifty in present week has seen Short Covering with a value obtain of 1268 points (3.66%) and OI shedding of 1.44 lakh shares (-6.85%) decreasing from 20.97 lakh share to 19.53 lakh shares and traded at premium of 132 points compared to 89 points. In Bank Nifty the higher OI on the Contact side in the weekly expiry scheduled 12th August is at 36,500(10.85L), 37,000(10.36L) & 37,500(7.55L) strike, with 36,200 & 36,500 acting as a robust resistance wherein there has been writing of 4.09 lakh shares & 3.89 lakh shares respectively.
The higher OI concentration on the Place side is at 35,000(11.41L) & 35,500(9.09L) strike, with 35,500 & 35,000 acting as a robust assistance as there has been of writing of 4.55 lakh shares & 4.23 lakh shares respectively whilst the critical level to watch will be 36,000 as there has been addition of 6.66L shares on Call side & 1.36L shares on Put side clearly indicating to be a decisive level for next week. The tentative variety for the present week is probably to be among 35,000 to 36,500.
Sectors and Stocks to watch this week
We count on the IT, Metal, Realty and Chemical sectors to do properly in the coming trading sessions. Stocks like TCS, Mindtree, Tech Mahindra, Lupin, SAIL, Tata Steel, DLF, Deepak Nitrite, Bata India, Bharti Airtel, Aarti Industries 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 monetary advisor ahead of investing.)