Nifty, Bank Nifty consolidating but overall structure remains positive; watch out for these stocks

By Chandan Taparia  

Nifty 50 index opened positive yesterday and surpassed its previous day’s high but comparatively moved in a narrow range. It remained consolidative for the most part of the day and saw slight weakness in the concluding hour. It formed a small-bodied Bearish candle on the daily scale and closed flattish but was hovering near to the highs of the previous session. Now it has to continue to hold above 17500 zones, for an up move towards 17650 and 17777 zones whereas support is placed at 17350 and 17272 zones. 

India VIX fell down by 0.17% from 16.52 to 16.49 levels. Spurt in India VIX in last few sessions has given a volatile swing and now it has to cool down below 14 zones to continue the bullish stance in the market. On Option front, Maximum Put OI is at 17000 followed by 17500 strike while maximum Call OI is at 17500 followed by 18000 strike. Marginal Call writing is seen at 17600 then 17500 strike while minor Put writing is seen at 17300 then 17250 strike . Option data suggests a broader trading range in between 17000 to 17800 zones while an immediate trading range in between 17300 to 17700 zones.

Nifty and Bank Nifty is consolidating at higher zones but the overall structure remains positive. Stock specific action to sustain the market at the current juncture.

Bank Nifty needs to hold above 37000

Bank Nifty opened positive yesterday but failed to surpass Tuesday’s high and remained weak for the entire day. It continues forming lower highs from the last three sessions and formed a Bearish candle on daily scale. Now it has to continue cross and hold above 37000 to witness a bounce towards 37350 and 37800 levels while on the downside major support is seen at 36500 levels. 

For weekly Bank Nifty, Maximum Put OI is at 37000 strike and maximum Call OI is placed at 37000 strike. We have seen Call writing in 37000 and 38500 while Put writing is witnessed at 36500 with unwinding at 37200 strike.

What to watch out for

On the sectoral front, Media, Realty and IT counters drove the market whereas weakness was seen in Private Banks and some profit booking decline in Financial Services stocks.  

We have a positive stance in Real Estate (DLF and Godrej Properties), Open Theme Related stocks (PVR, Indian Hotels), Consumption (Mcdowell Holdings, United Breweries), IT (Tech, Hcl Technologies, Mindtree, LTI and LTTS), Selective Metal (Hindalco) as per the outcome of US FED meeting. Expecting a move towards fresh life-time high zones in Nifty index if US Fed outcome does not disappoint the street.

(Chandan Taparia is the Vice President – Equity Derivatives & Technical, Broking & Distribution, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)