By Rajesh Palviya
Nifty closed at 16529 with a obtain of 291 points on a weekly basis. On the weekly chart, the index has formed a extended Bullish candle forming larger High-low compared to the preceding week and has closed above preceding week’s higher indicating positive bias. 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 16600 level it would witness acquiring which would lead the index towards 16800-16900 levels.
However, if the index breaks beneath the 16350 levels it would witness promoting which would take the index towards 16200-16000. Nifty is trading above the 20 and 50 day SMA which are vital quick-term moving averages, indicating positive bias in the quick 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 16900-16300 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 futures closed at 16517.35 on a positive note with 10.81% boost in open interest and with value gains of 1.63% indicating Long Build Up. The open interest position of FII’s in Index Futures is at Rs 15,936 improved by 995 crore and in Stock Futures it is at Rs 1, 13,045 improved by 2,999 crore. PCR OI for the duration of the week has made a higher of 1.73 & low of 1.23 and closed on a weekly basis at 1.73 levels. PCR OI at present is at 1.73 levels which is effectively above the median line and at elevated levels and additional move towards larger level will indicate caution in industry.
Options Built-up Shows that for now, Nifty has sturdy help at 16,400 followed by 16,300 & 16,000 and resistance. 17,000, 16,500 & 16,400 strike Contact and 16,300 strike Put followed by 16,200 & 16,000 strike has higher open interest concentration which suggests that Nifty is probably to trade among these levels of 16,700 on upside & 16,300 on downside for the coming week with 16500 acting as a pivotal level as each Call & Put have higher OI concentration at 16,500 strike value. This week important addition in month-to-month expiry was seen on the Place front with 16,500, 16,400 and 16,300 strikes adding 21.40 lakh,12.85 lakh and 10.33 lakh shares in OI respectively even though there was no substantial unwinding witnessed in any strike. This week important addition in month-to-month expiry was seen on the Contact front with 16,800 and 17,000 strike adding 5.36 lakh and 5.28 lakh shares in OI respectively even though unwinding was witnessed in 16,000 & 15,900 strike to the tune of 1.88 lakh & 2.91 lakh respectively. Implied Volatility of alternative for the existing series is at 13.41% in contrast to 12.12% of last week, even though in the coming week trajectory is probably to be flat-to- marginally growing. FII have been Net Purchasers in Index Future to the tune of 584 crs for the duration of the last week.
Bank Nifty Outlook
Bank Nifty began the week on a flat note and remained in a narrow variety(36300-35500) all through the week, indicating lack of strength on either side. Bank Nifty closed at 36169 with a obtain of 360 points on a weekly basis.
On the weekly chart the index has formed a smaller Bullish candle with shadows on either side indicating indecisiveness amongst participants concerning the path. Since the previous 3 months, the index is consolidating inside 36200-34000 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 36300 level it would witness acquiring which would lead the index towards 36700-37100 levels. However if the index breaks beneath 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 vital quick term moving typical, 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 method. For the week, we count on Bank Nifty to trade in the variety of 37100-35400 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. Bank Nifty futures closed at 36211.75 on a positive note with -1.64% lower in open interest and with a value gains of .75% indicating Short Covering. Bank Nifty has a sturdy help at 35,000 as 35,000 Put strike is obtaining higher OI concentration followed by 34,500 & 34,000 even though on the Call front 37,000CE strike has higher OI concentration indicating sturdy resistance level followed by 36,500 & 38,000 even though 36,000 will act as a pivotal level.
Sectors and stocks to watch this week
We count on the IT, Metal, Capital Goods, Chemical and FMCG, cement sectors to do effectively in the close to term. Stocks such as TCS, Titan Company, Bata India, L&T, Cummins, Tata Steel , KPIT Tech , Polycab 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 advice from your economic advisor prior to investing.)