By Rajesh Palviya
Nifty closed at 15860 with a gain of 177 points on a weekly basis. On the weekly chart index has formed a bullish candle and remained restricted within previous week’s High-Low range indicating lack of strength on either side. 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 15900 level it would witness buying which would lead the index towards 16100-16300 levels. However, if index breaks below 15700 level it would witness selling which would take the index towards 15600-15500. Nifty is trading above 20 and 50 day SMAs which are important short term moving averages, indicating positive bias in the short term. Nifty is expected to remain in an uptrend to sideways zone until it breaks 10600 on the downside. For the week, we expect Nifty to trade in the range of 16300-15800 with a positive bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have both turned positive and are above their respective reference lines indicating positive bias
Nifty derivatives outlook
Nifty futures on Friday closed at 15888 on a positive note with price gains of 0.35% (compared to previous day) and 3.10% increase in open interest adding 2.89Lac shares indicating Long Build Up. The sentiment indicator PC Ratio is currently trading at 1.20 although above the median line but in a comfortable zone indicating a positive bias in the market. In Nifty the high OI on the CALL side in the weekly expiry scheduled 01st July is at 16,000(31.90L), 16,200(25L) & 16,500(26.88L), with 16,000 acting as an important resistance level wherein there has been writing of 11.52Lac shares followed by 16400. The high OI on the PUT side is at 15,700(24.44L) -15,800(24.28L) & 15,600(18.70L) strike, with 15,800 & 15,700 acting as a strong support level as there has been of writing of 11.25Lac & 8Lac shares respectively. So the most probable range indicated is 15700-15500 on the lower side and on the upside its 16000-16200.
Bank Nifty outlook
Bank Nifty closed at 35365 with a gain of 807 points on a weekly basis. On the weekly chart the index has formed a long bullish candle forming higher High-Low compared to previous week and has closed above previous week’s high indicating positive bias. Since past 3-5 weeks, index has been consolidating within 35800-34000 levels indicating short term consolidation. Hence any either side breakouts will indicate further direction.
The chart pattern suggests that if Bank Nifty crosses and sustains above 35500 levels it would witness buying which would lead the index towards 36000-37200 levels. However if index breaks below 34900 level it would witness selling which would take the index towards 34400-34000. Bank Nifty is trading above 20, 50 and 100 day SMAs which is an important short term moving average, indicating positive bias in the short term. Bank 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 Bank Nifty to trade in the range of 37000-34500 with a positive bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have both turned positive and are above their respective reference lines indicating positive bias.
Bank Nifty derivatives outlook
Bank Nifty futures on Friday closed at 35364 on a positive note with price gains of 1.50% (compared to previous day) and 4.60% increase in open interest adding 0.85Lac shares indicating Long Build Up. In Bank Nifty the high OI on the CALL side in the weekly expiry scheduled 01st July is at 35,500(9.37L), 36,000(9.11L) & 37,000(8.24L), with 36,000 & 36,500 acting as a strong resistance wherein there has been writing of 5.91Lac & 3.47Lac shares in OI respectively. The high OI on the PUT side is at 35,000(11.14L), 34,500(8.12L) & 34,000(7.14L) strikes, with 35,000 & 35,200 acting as a strong support level followed by 34,500 levels as there has been of writing of 8.15Lac & 3.38Lac shares respectively. The pivotal level for the Bank nifty is at 35,500 as both on the call side as well as on the put side there has been addition of 4.31Lac & 3.42Lac shares in OI respectively; while the tentative range for the current weekly expiry is likely to be between 34,000-34,500 to 36,000-36,500.
Sector and stocks in focus this week
We expect the IT, Capital goods, Chemical, Metal and Banking sectors can do well in the near term. One can focus on stocks like TCS, Infosys, Maruti Suzuki India, HDFC Life Insurance Company, National Aluminium, Tata Steel, Cummins India, Glenmark Pharmaceuticals and Marico can do well in near term . From the Midcap space, one can focus on stocks like Skipper, Andhra Sugars, Sterling and Wilson Solar, GoodYear India, D-Link India, Nocil .
(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s own. Please consult your financial advisor before investing.)