Nifty above 16400 would aim towards 16900, Bank Nifty support at 34800; ICICI Bank, HDFC money-making bets

Nifty Put options OI distribution shows that 16000 has highest OI concentration followed by 16100 and 15900 which may act as support for current expiry

NSE Nifty 50, Bank nIfty
Bank Nifty Put options OI distribution shows that 34800 has highest OI concentration followed by 34500 which may act as support for current expiry.

By Rajesh Palviya

NSE Nifty 50 index closed at 16352 with a gain of 86 points on Friday on a weekly basis. On the weekly chart the index has formed a Bullish candle with a long lower shadow indicating buying at lower levels. The chart pattern suggests that if Nifty 50 crosses and sustains above 16400 level it would witness buying which would lead the index towards 16600-16900 levels. However if the index breaks below 16100 level it would witness selling which would take the index towards 15800-15600. 

For the week, we expect Nifty to trade in the range of 16600-16000 with a positive bias. The weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias.

Nifty Derivative Outlook

Nifty futures closed at 16327 on a positive note with 034% decrease in the open interest indicating Short Covering. Nifty Futures closed at a discount of 26 points compared to the previous day discount of 2 points. India VIX index is at 21.48 v/s 22.72. Nifty ATM call option IV is currently 20.32 whereas Nifty ATM Put option IV is quoting at 21.28. Index options PCR is at 1.14 v/s 1.13 & F&O Total PCR is at 0.88.

Nifty Put options OI distribution shows that 16000 has highest OI concentration followed by 16100 and 15900 which may act as support for current expiry. Nifty Call strike 16500 followed by 16200 witnessed significant OI concentration and may act as resistance for current expiry.

Nifty Bank Outlook

Bank Nifty started the week on a flat note but continued its previous week’s positive momentum to end the week on a strong note. Bank Nifty closed at 35613 with a gain of 1337 points on a weekly basis. On the weekly chart the index has formed a sizable bullish candle and closed above previous week’s high indicating positive bias. The chart pattern suggests that if Bank Nifty crosses and sustains above 35700 level it would witness buying which would lead the index towards 36000-36500 levels. However if the index breaks below 35300 level it would witness selling which would take the index towards 34800-34000. 

guest

For the week, we expect Bank Nifty to trade in the range of 36500-35000 with mixed bias. The daily and weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias. 

Nifty Bank Derivative Outlook

Bank Nifty closed at 35631 on positive note with 3.95% decrease in open interest indicating Short Covering. Bank Nifty Futures closed at a premium of 18 points compared to the previous day premium of 71 points. Bank Nifty Put options OI distribution shows that 34800 has highest OI concentration followed by 34500 which may act as support for current expiry. Bank Nifty Call strike 36000 followed by 35700 witnessed significant OI concentration and may act as resistance for current expiry.

Sectors and stocks to watch this week

We expect Auto, Banking, FMCG and pharma sectors to show bullishness. We may see some short covering action in IT stocks also in the near-term. One can focus on stocks like Mahindra & Mahindra (M&M), TVS Motor Company, Godrej Consumer Products, Indiamart Intermesh, ICICI Bank, HDFC Bank, Housing Development Finance Corporation, Dr.Reddy’s Laboratories, Sun Pharma, Zydus Lifesciences, HDFC Life.

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

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