By Rajesh Palviya
On the weekly chart, NSE Nifty 50 index has formed a Bearish candle with a long lower shadow indicating buying at lower levels. The chart pattern suggests that if Nifty crosses and sustains above 17300 level it would witness buying which would lead the index towards 17500-17800 levels. However if the index breaks below 16800 level it would witness selling which would take the index towards 16500-16300. For the week, we expect Nifty to trade in the range of 17400-16300 with a mixed bias. Weekly RSI is quoting below its reference line indicating negative bias in the short term indicating selling may arise on pullback rally.
Bank Nifty outlook
On the weekly chart, Bank Nifty index has formed a Bearish candle with a long lower shadow indicating buying at lower levels. The chart pattern suggests that if Bank Nifty crosses and sustains above 39000 level it would witness buying which would lead the index towards 39300-39700 levels. However if index breaks below 38250 level it would witness selling which would take the index towards 37800-37300. For the week, we expect Bank Nifty to trade in the range of 39700-37300 with mixed bias. Weekly RSI is quoting below its reference line indicating negative bias in the short term. However the daily RSI is in positive terrain and sustaining above the reference line which indicates short term pullback.
Sectors and stocks in focus
We expect Automobiles, FMCG, Pharma, Chemical & Consumer sectors may do well in the coming week. One Can focus on stocks like M&M, Eicher Motors, Cipla, Sun Pharma, Bharti Airtel, Tata Chem, Laxmi Organics, GRSE, Poonawala Fincorp, Havells, ABFRL, Indian Hotel are likely to do well in near term.
NSE Nifty 50 trading strategy for 6 Oct F&O expiry
Traders can initiate a Moderately Bullish strategy with reduced premium outflow & lower breakeven point called BULL CALL SPREAD of 6 October expiry wherein trader can buy one lot of 17,100 call strike @ 144 and simultaneously sell one lot of 17,350 call strike @ 47, so that net outflow or maximum loss will be restricted to up to Rs 4,850. If Nifty closes above 17,197 on expiry day then the strategy will start making profits. The maximum gains will be restricted up to Rs 7,650; because the gains of long 17,100 strike call will be offset by the sold 17,350 strike call if Nifty closes above 17,350 on expiry.
(Rajesh Palviya, VP – Technical and Derivative Research, Axis Securities. Views expressed are the author’s own.)