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Nifty to aim 16200 above 15800, Bank Nifty to trade in red; use Call Ratio Spread for monthly F&O expiry

The chart pattern suggests that if Nifty crosses and sustains above 15800 level it would witness buying which would lead the index towards 15900-16200 levels.

NSE Nifty 50, Bank Nifty
The strategy which we are suggesting for this monthly expiry dated 30th June is a Moderately Bullish strategy

By Rajesh Palviya

NSE Nifty 50 index started the week with an upward gap and buying momentum for most part of the week led it to close on a strong note. Nifty 50 closed at 15699 with a gain of 406 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 chart pattern suggests that if Nifty crosses and sustains above 15800 level it would witness buying which would lead the index towards 15900-16200 levels. However if the index breaks below 15600 level it would witness selling which would take the index towards 15400-15200. For the week, we expect Nifty to trade in the range of 16200-15400 with mixed bias. The weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias.

Nifty Bank Outlook

Bank Nifty started the week with an upward gap and buying momentum for most part of the week led it to close in positive territory. Bank Nifty closed at 33627 with a gain of 884 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 chart pattern suggests that if Bank Nifty crosses and sustains above 33800 level it would witness buying which would lead the index towards 34200-34600 levels. However if the index breaks below 33300 level it would witness selling which would take the index towards 33000-32500. 

For the week, we expect Bank Nifty to trade in the range of 34600-33300 with a negative bias. The weekly strength indicator RSI is in negative terrain and sustaining below its reference lines indicating negative bias.

Sectors and stocks in focus this

We expect the Automobile, Pharma, Capital Goods, Banking, Real Estate sectors may show buying interest. Stocks like Mahindra & Mahindra (M&M), Eicher Motors, Hero MotoCorp, PVR, Suntek Realty, Shriram Transport Finance, Bajaj Finance may show strength in coming days.

Nifty 50 trading strategy for 30th June monthly expiry

The strategy which we are suggesting for this monthly expiry dated 30th June is a Moderately Bullish strategy called as Call Ratio Spread, which involves Buying of one lot of Nifty 15,700 Call @ 158 & selling of two lots of 15,950 Call @ 55. The cost of the strategy involves outflow of Rs 2,500 which is the maximum loss if Nifty trades & remains below 15,750 levels on expiry. The maximum profit of Rs 10,000 will be attained above 15,950 levels, while strategy will start making loss if Nifty crosses 16,150, hence it’s advisable to exit the strategy in total to avoid unlimited losses above 16,150.While the strategy will be profitable in the range of 15800 to 16100.

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

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