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Nifty to see buying above 17500, Bank Nifty to trade with mixed bias; Use Put Ladder for 11 Aug F&O expiry

The chart pattern suggests that if Nifty crosses and sustains above 17500 level it would witness buying which would lead the index towards 17700-17800 levels.

Nifty to see buying above 17500, Bank Nifty to trade with mixed bias; Use Put Ladder for 11 Aug F&O expiry
The strategy which we are suggesting for the weekly expiry scheduled on 11th August is a Bearish strategy

By Rajesh Palviya

On the weekly chart, NSE Nifty 50 index has formed a small Bullish candle carrying shadows on the either side representing volatility on the either side. The chart pattern suggests that if Nifty crosses and sustains above 17500 level it would witness buying which would lead the index towards 17700-17800 levels. However if the index breaks below 17200 level it would witness selling which would take the index towards 17000-16800. For the week, we expect Nifty to trade in the range of 17800-17000 with mixed bias. The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias.

Also read: Paytm share price jumps 2% despite Q1 net loss widening to Rs 645 crore; should you buy, hold or sell?

Bank Nifty Outlook

Bank Nifty started the week on a flat note and remained in a narrow range(38200-37200) throughout the week indicating lack of strength on either side. Bank Nifty closed at 37921 with a gain of 429 points on a weekly basis . On the weekly chart the index has formed a small Bullish candle with shadows on either side indicating indecisiveness amongst participants regarding the direction.

Also read: SBI share price drops 2.8% after April-June quarter results disappoint; Should you buy, sell, or hold?

The chart pattern suggests that if Bank Nifty crosses and sustains above 38200 level it would witness buying which would lead the index towards 38500-39000 levels. However if index breaks below 37500 level it would witness selling which would take the index towards 37000-36700. For the week, we expect Bank Nifty to trade in the range of 39000-37000 with mixed bias. The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias. 

Sectors, stocks to watch this week

We expect sectors like Cement, Banking and Financial, Capital Goods, Pharma, IT may show strength this week. Stocks like ACC, UltraTech Cement, ICICI Bank, HDFC Bank, Cummins India, ABB, Cipla, Sun Pharma, LTTS, TCS, Infosys may show bullish momentum this week.

NSE Nifty 50 trading strategy for 11 Aug F&O expiry

The strategy which we are suggesting for the weekly expiry scheduled on 11th August is a Bearish strategy namely PUT LADDER, which involves buying of one lot of Nifty 17,400 PUT @ 141 & selling of one lot each of 17,250 PUT @ 84 & one lot of 17,100 PUT @ 48. The maximum profit of Rs 7,000 will be attained at 17,250 levels, while strategy will start making loss below 17,000. The cost of the strategy involves NIL outflows if Nifty closes & remains above 17,400 levels; however below 17,000 it’s advisable to exit the strategy in total to avoid unlimited losses. Break Even points of the strategy are 17,391 on Upside & 16,941 on the lower side.

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

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