Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy.

By Rajesh Palviya

On the weekly chart, the Nifty 50 index formed a long bullish candle forming higher High-low compared to previous week and closed above the previous week’s high indicating positive bias. The index is moving in a Higher Top and Higher Bottom formation on the daily chart indicating positive bias. The chart pattern suggests that if Nifty crosses and sustains above 18000 levels it would witness buying which would lead the index towards 18200-18400 levels. However if the index breaks below 17600 level it would witness selling which would take the index towards 17500-17400. Nifty is trading above 20 day SMAs which is an important short term moving average, indicating positive bias in the short term. Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Nifty to trade in the range of 18400-17500 with a positive bias.

The daily and weekly strength indicator RSI is in bullish mode and sustaining above 50 mark which supports bullish sentiments ahead.

Nifty derivative outlook

Nifty futures closed at 17854 on a negative note with 0.86% increase in the open interest indicating Long Build Up. Nifty Futures closed at a discount of 1 point compared to the previous day premium of 7 points.
Index options PCR is at 1.26 v/s 1.22 & F&O Total PCR is at 0.91.

Nifty Put options OI distribution shows that 17500 has highest OI concentration followed by 17600 & 17800 which may act as support for current expiry.

Nifty Call strike 18000 followed by 18300 witnessed significant OI concentration and may act as resistance for current expiry.

Bank Nifty Outlook

On the weekly chart the Bank Nifty index formed a sizable bullish candle forming higher High-low compared to previous session indicating positive bias. The index is moving in a Higher Top and Higher Bottom formation on the daily chart indicating positive bias. The chart pattern suggests that if Bank Nifty crosses and sustains above 38300 level it would witness buying which would lead the index towards 38600-39100 levels. However if the index breaks below 37000 level it would witness selling which would take the index towards 36500-36300. Bank Nifty is trading above 20, 50, and 100 day SMAs which are important short term moving averages, indicating positive bias in the short to medium term. Bank Nifty continues to remain in an uptrend in the short term, so buying on dips continues to be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 39100-36500 with a positive bias.

The daily and weekly strength indicator RSI is in bullish mode and sustaining above 50 mark which supports bullish sentiments ahead.

Bank Nifty derivative outlook

Bank Nifty closed at 37857 on positive note with 5.77% increase in open interest indicating Long Build Up. Bank Nifty Futures closed at a discount of 22 points compared to the previous day premium of 40 points.

Bank Nifty Put options OI distribution shows that 37500 has highest OI concentration followed by 38000 & 37700 which may act as support for current expiry.

Bank Nifty Call strike 38000 followed by 37500 witnessed significant OI concentration and may act as resistance for current expiry.

Sectors, stocks to watch this week

We expect Information Technology, Cement, Textile, Chemical, Sugar and Real Estate to show strength in coming days . One can focus on stocks such as TCS (Tata Consultancy Services), Infosys, Birlasoft, Redington (India), Balrampur Chini Mills, Navin Fluorine International, SRF, UltraTech Cement, Indiabulls Real Estate, DLF, Arvind, Indo Count Industries, Coromandel International.

(Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)

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