Nifty may trade in 18500-17800 range this week, Bank Nifty to witness buying if it breaches 38900

Nifty Call strike 18200 followed by 18700 witnessed significant OI concentration and may act as resistance for current expiry.

For the week, we expect Bank Nifty to trade in the range of 39600-37600 with a positive bias. (Image: PEXELS)

By Rajesh Palviya

Nifty started the week with an upward gap and buying momentum for the most part of the week led it to close on a strong note. Nifty closed at 18256 with a gain of 443 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 the previous week’s high indicating positive bias. The chart pattern suggests that if Nifty crosses and sustains above 18300 levels it would witness buying which would lead the index towards 18400-18600 levels. However, if the index breaks below 18100 level it would witness selling which would take the index towards 18000-17800. For the week, we expect Nifty to trade in the range of 18500-17800 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

Derivative Outlook :

Nifty futures closed at 18295 on a positive note with 1.89% decrease in the open interest indicating Short Covering. Nifty Futures closed at a premium of 10 points compared to the previous day premium of 11 points.  India VIX index is at 16.56 v/s 16.70. Nifty ATM call option IV is currently 11.91 whereas Nifty ATM Put option IV is quoting at 14.44. Index options PCR is at 1.25 v/s 1.35 & F&O Total PCR is at 0.89 Nifty Put options OI distribution shows that 18200 has highest OI concentration followed by 18000 & 17900 which may act as support for current expiry. Nifty Call strike 18200 followed by 18700 witnessed significant OI concentration and may act as resistance for current expiry.

Bank Nifty

Bank Nifty started the week on a positive note and remained positive in the initial period however profit booking at higher levels erased most of the earlier losses to end on a flat note. Bank Nifty closed at 38370 with a gain of 631 points on a weekly basis. On the weekly chart, the index has formed a small Bullish candle with a long upper shadow indicating profit booking at higher levels.  The chart pattern suggests that if Bank Nifty crosses and sustains above 38900 levels it would witness buying which would lead the index towards 39300-39700 levels. However, if the index breaks below the 37900 level it would witness selling which would take the index towards 37400-37000 levels. For the week, we expect Bank Nifty to trade in the range of 39600-37600 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.

Derivative Outlook :

Bank Nifty Put options OI distribution shows that 38000 has highest OI concentration followed by 38500 & 38200 which may act as support for current expiry. BankNifty Call strike 38500 followed by 38000 witnessed significant OI concentration and may act as resistance for current expiry.

Sectors and stocks for coming weeks:

We expect IT, Cement, Sugar, Fertilisers, Chemicals and Real Estate may do well in the near term. One can focus on stocks like  Infosy, ACC, Balrampur chini, GNFC, Chambal Fertiliser, Tatachem, Deepak Nitrite, Brigade, DLF.

(Rajesh Palviya is the Vice President  – Research ( Head Technical & Derivatives) at Axis Securities  Limited. Views expressed are the author’s own.)

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