By Rajesh Palviya
Nifty began the prior week on a flat note and traded with intense volatility on either side all through the week. However, Friday’s sell-off dragged index reduced to finish close to low’s. Nifty closed at 16451 with a loss of 79 points on a weekly basis.
On the weekly chart the index has formed a Bearish candle with an upper shadow indicating promoting at greater levels. This formation resembles to “Shooting Star” a quick-term trend reversal pattern even so any adhere to up close under 16376 may well confirm above pointed out pattern. The chart pattern suggests that if Nifty crosses and sustains above 16500 level it would witness getting which would lead the index towards 16700-16800 levels. However if the index breaks under 16300 level it would witness promoting which would take the index towards 16200-16000. Nifty is trading above the 20 and 50 day SMA which are significant quick term moving averages, indicating positive bias in the short term. Nifty continues to stay in an uptrend in the medium term, so getting on dips continues to be our preferred technique. For the week, we anticipate Nifty to trade in the variety of 16600-16200 with mixed bias.
The weekly strength indicator RSI is above its respective reference lines indicating positive bias.
Derivative Outlook :
Nifty Futures in existing week has seen Long Unwinding with a value reduce of -84 points (-.51%) and OI shedding of 27.69lac shares (-20.29%) decreasing from 136.47Lac share to 108.78Lac shares indicating profit booking and traded at discount of -17 points compared to discount of -12 points in last week. The sentiment indicator Computer Ratio (Nifty) is at the moment trading at 1.21 from 1.73 of last week which is above the median line but in a comfy zone indicating positive bias. Nifty highest OI on the Get in touch with side in the month-to-month expiry scheduled 26th August is at 16,500(49.77L) , 16,600(44.05L) & 16,700(41.10L) strikes respectively wherein writing of 23.62Lac shares was witnessed at 16,500 strike & 13.72Lac shares of writing was seen at 16,600 strike indicating robust resistance zone at 16,500-16,600, though on the Place side highest OI is at 16,400(42.79L) & 16,000(43.72L) strikes wherein writing of 13.52Lac & 8.71Lac share was seen at 16,400 & 16,300 strikes respectively indicating a robust help zone for the existing expiry though unwinding of 10.54L & 11.73L was seen at 16500 & 16600 place. So the most probable variety for the month-to-month expiry is probably to be amongst 16,300 to 16,600.
Banknifty Outlook :
Bank Nifty began the week on a flat note even so promoting stress all through the week led the index to finish on a weak note. Bank Nifty closed at 35034 with a loss of 1136 points on a weekly basis.
On the weekly chart the index has formed a extended bearish candle forming reduced High-Low compared to prior week and has closed under its low indicating weakness at existing levels. Since the previous 3 months, index is consolidating inside 36300-34000 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 35300 level it would witness getting which would lead the index towards 35800-36000 levels. However if index breaks under 34800 level it would witness promoting which would take the index towards 34500-34000. Bank Nifty is trading under 20-day and 50-day SMA which are significant 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 getting on dips continues to be our preferred technique. For the week, we anticipate Bank Nifty to trade in the variety of 35800-34000 with mixed bias.
The weekly strength indicator RSI is moving downwards and is quoting under its reference line indicating unfavorable bias. However, momentum oscillator Stochastic has turned positive from the oversold zone indicating a probable consolidation or an up-move in the close to term.
Derivative Outlook :
Bank Nifty in existing week has seen Long Unwinding with a value reduce of -1149 points (-3.17%) and OI shedding of -1.19Lac shares (-6.17%) decreasing from 19.21Lac share to 18.02Lac shares and traded at premium of 29 points compared to 42 points. In Bank Nifty the higher OI on the Get in touch with side in the month-to-month expiry scheduled 26th August is at 36,000(19.70L), 36,500(11.66L) & 35,500(12.38L) strike, with 35,300 & 36,000 acting as a robust resistance wherein there has been writing of 5.39Lac shares & 5.49Lac shares respectively. The higher OI concentration on the Place side is at 34,000(11.35L) & 34,500(9.70L) strike and will be acting as a robust help as there has been of writing of 4.02Lac shares & 3.73Lac shares respectively though the significant level for this expiry will be 35,000 as there has been higher OI concentration of 13.44L shares on Call side & 15.68L shares on Put side adding 11.46L & 5.52L shares in OI respectively. Any sustain & decisive move above or under 35,000 will give an significant clue for future trend in Bank nifty. The tentative variety for the existing week is probably to be amongst 34,000 to 36,000.
Sectors and Stocks for Coming Trading Sessions: We anticipate IT, FMCG, Capital goods, and Chemical sectors to do properly in the close to term though Metal, Banking may well show some weakness. Stocks like TCS, Mindtree, Wipro, HUL, Britannia, Godrej CP, Navin Flourine can do properly 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 advice from your economic advisor ahead of investing.)