By Rajesh Palviya

In the previous week Nifty opened with an upward gap and witnessed buying momentum in the initial half however profit booking in the last couple of sessions erased some of earlier gains. Nifty closed at 17516 with a gain of 414 points on a weekly basis. On the weekly chart the index has formed a bullish candle with upper shadow indicating profit booking at higher levels. The chart pattern suggests that if Nifty crosses and sustains above 17700 levels it would witness buying which would lead the index towards 17800-18000 levels. However if the index breaks below 17400 level it would witness selling which would take the index towards 17300-17200. For the week, we expect Nifty to trade in the range of 17800-17200 with mixed bias. The weekly strength indicator RSI is below its reference line whereas the daily RSI continues to remain bullish indicating strength.

Nifty Derivative Outlook

Nifty futures closed at 17530 on a negative note with 7.98% decrease in the open interest indicating Long Unwinding. Nifty Futures closed at a premium of 26 points compared to the previous day discount of 29 points. FIIs were buyers in Index Futures to the tune of 1829 crore and were buyers in Index Options to the tune of 877 crore, sellers in the Stock Futures to the tune of 32 crore. Net buyers in the derivative segment to the tune of 1,691 crore. India VIX index is at 18.90 v/s 19.16. Nifty ATM call option IV is currently 13.94 whereas Nifty ATM Put option IV is quoting at 17.83. Index options PCR is at 0.90 v/s 0.86 & F&O Total PCR is at 0.99.

Nifty Put options OI distribution shows that 17500 has highest OI concentration followed by 17200 & 17400 which may act as support for current expiry. Nifty Call strike 17800 followed by 18000 witnessed significant OI concentration and may act as resistance for current expiry.

Bank Nifty Outlook

Bank Nifty started the week on a positive note and remained positive in the initial period, however, profit booking at higher levels erased some of the earlier gains. Bank Nifty closed at 38789 with a gain of 1100 points on a weekly basis. On the weekly chart, the index has formed a small Bullish candle forming higher High-low compared to previous week and has closed above previous week’s high indicating positive bias.

The chart pattern suggests that if Bank Nifty crosses and sustains above 39000 levels it would witness buying which would lead the index towards 39500-39900 levels. However if index breaks below 38500 level it would witness selling which would take the index towards 38300-38000. For the week, we expect Bank Nifty to trade in the range of 39900-38300 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

Bank Nifty Derivative Outlook

Bank Nifty closed at 38871 on a negative note with 0.08% decrease in open interest indicating Long Unwinding. Bank Nifty Futures closed at a premium of 24 points compared to the previous day discount of 49 points. Bank Nifty Put options OI distribution shows that 38500 has highest OI concentration followed by 39000 & 38700 which may act as support for current expiry. Bank Nifty Call strike 39000 followed by 39200 witnessed significant OI concentration and may act as resistance for current expiry.

Sectors, stocks in focus this week

We expect the Sugar, Real Estate, Metal, Pharma, Banking sectors to do well in the near term. We expect stocks like Maruti Suzuki, Dwarikesh Sugar, Sun Pharma, Cipla, Hindalco Industries, Vedanta, Apollo Hospital may do well in near term.

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