Nifty above 17800 may head to 18300, Bank Nifty to hit 38800; Airtel, HCL Tech, Dabur look strong on charts

September 20, 2021 9:07 AM

The chart pattern suggests that if Nifty crosses and sustains above 17800 level it would witness buying which would lead the index towards 18000-18300 levels

Nifty, bank niftyFor the week, we expect Bank Nifty to trade in the range of 40400-38700 with a positive bias

By Rajesh Palviya

Nifty started the week on a flat note and buying momentum throughout the week led the index to close on a strong note near the week’s high. Nifty closed at 17585 with a gain of 216 points on a weekly basis. On the weekly chart the index has formed a long bullish candle forming higher High-low compared to the previous week and has closed above previous week’s high 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 17800 level it would witness buying which would lead the index towards 18000-18300 levels. However, if index breaks below 17500 level it would witness selling which would take the index towards 17300-17000. Nifty is trading above 20 and 50 day SMA’s which is 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 18000-17400 with a positive bias.

The weekly strength indicator RSI is above its respective reference lines indicating positive bias

Nifty Derivative Outlook

Nifty futures closed at 17603.15 on a positive note with -2.19% decrease in open interest and with a price gain of 1.38% indicating short covering. Nifty annualized volatility index, India VIX, has decreased to 15.21% from 13.94. PCR OI during the week has made a high of 1.58 & low of 1.15 and closed on a weekly basis at 1.15 levels. Options built up shows that for now Nifty has strong support at 17,200 followed by 17,300 & 17,500 and resistance at 17,500 levels followed by 17,800 & 18,000.

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

This week major addition in monthly expiry was seen on the PUT front with 17,600 17,700 and 17,500 strike adding 16.03 lakh, 12.54 lakh and 15.92 lakh shares in OI, respectively; while there was unwinding of 9.94 lakh shares was witnessed in 17,000 strike. This week major addition in monthly expiry was seen on the CALL front with 17,600,17,700 and 17,800 strike adding 6.87 lakh, 6.69 lakh and 7.51 lakh shares in OI, respectively; while unwinding was witnessed in 17,300 & 17,400 strike to the tune of 5.08 lakh & 5.23 lakh shares respectively.

Bank Nifty Outlook

Bank Nifty started the week on a flat note and buying momentum for most part of the week led it to close on a positive note. Bank Nifty closed at 37812 with a gain of 1129 points on a weekly basis.

For the week, we expect Bank Nifty to trade in the range of 38800-37000 with a positive bias.

On the weekly chart the index has 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 weekly chart indicating sustained up trend on long term charts. The chart pattern suggests that if Bank Nifty crosses and sustains above 38100 level it would witness buying which would lead the index towards 38500-38800 levels. However if index breaks below 37000 level it would witness selling which would take the index towards 36500-36200. 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 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 38800-37000 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 Derivative Outlook

Bank Nifty futures closed at 37850.05 on a positive note with -0.73% decrease in open interest and with price gains of 2.93% indicating short covering. FII activity in the index futures was on the ‘buy’ side during the last week. The open interest position of FII’s in index futures is at Rs 15864 increased by 962 crore and in stock futures it is at Rs 1,29,297 increased by 4,476 crore. Bank Nifty has a strong support at 37,000; as 37,000 Put strike is having high OI concentration followed by 37,500 & 36,500 while on the Call front 38,000CE strike has high OI concentration indicating strong resistance level followed by 38,500 & 39,000.

Sectors and stocks for short term

We expect IT, Chemical, FMCG,Telecom may show strength while Pharma, Automobile, Power sectors remain in consolidation mode. We expect stocks like Bharti Airtel, HCL Tech, Deepak Nitrite, Havells India, Voltas, Dabur India, Kotak Mahindra Bank, Hero MotoCorp, Polycab India, SBI Life Insurance Company can show strength in near term.

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

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