Nifty to remain negative, use Put Ladder strategy to pocket gains; Bank Nifty below 32200 may fall to 31500

The chart pattern suggests that if Nifty 50 crosses and sustains above 15400 level it would witness buying which would lead the index towards 15600-15700 levels.

Nifty, Bank nifty
The chart pattern suggests that if Bank Nifty crosses and sustains above 33200 level it would witness buying which would lead the index towards 33500-33800 levels

By Rajesh Palviya

NSE Nifty 50 index closed at 15294 with a loss of 908 points on a weekly basis. On the weekly chart, the index has formed a long bearish candle forming lower High-Low compared to previous week indicating weakness at current levels. 

The chart pattern suggests that if Nifty 50 crosses and sustains above 15400 level it would witness buying which would lead the index towards 15600-15700 levels. However,  if the index breaks below 15100 level it would witness selling which would take the index towards 15000-14500. For  the week, we expect Nifty to trade in the range of 15700-14800 with a negative 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 a downward gap and extended earlier week’s selling momentum however short covering along with buying support at lower levels recovered some of the earlier losses. Bank Nifty closed at 32743 with a loss of 1741 points on a weekly basis.

On the weekly chart the index has formed a sizable bearish candle and closed below previous week’s low indicating weakness on a short term basis.

The chart pattern suggests that if Bank Nifty crosses and sustains above 33200 level it would witness buying which would lead the index towards 33500-33800 levels. However if the index breaks below 32200 level it would witness selling which would take the index towards 32000-31500 levels. 

For the week, we expect Bank Nifty to trade in the range of 33500-31500 with a negative bias. The weekly strength indicator RSI is in negative terrain and sustaining below its reference lines indicating negative bias.

Nifty 50 trading strategy for 23rd June F&O expiry

The strategy which we are suggesting for the weekly expiry scheduled on 23rd June is PUT LADDER, which involves buying one lot of Nifty 15,300 PUT @ 183 & selling one lot each of 15,100 PUT @ 113 & one lot of 14,900 PUT @ 68. The maximum profit of Rs 9,900 will be attained at 15,100 levels, while strategy will start making loss below 14,700. The cost of the strategy involves a marginal outflow is Rs 100, which is the maximum loss if Nifty closes & remains above 15,300 levels on expiry, however, any sharper movement on lower side could result in losses and, as an extra put has been sold it’s advisable to exit the strategy in total to avoid unlimited losses below 14,700. Break Even points of the strategy are 15,298 on upside and 14,698 on the lower side.

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

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