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Should the index breach the critical support level of 19,350, the downside target is anticipated to be within the 19,200-19,100 range. Analysts recommend stocks such as Reliance Industries, Kotak Bank, TCS, NTPC, Tata Steel, Havells, ACC, PNB, Maruti Suzuki, Sun Pharma, Hudco, KPR Mills, and BEL for trading opportunities.
DHARMESH SHAH
HEAD-TECHNICALS, ICICI SECURITIES
Where is Nifty headed this week?
After five weeks’ correction, the weekly price action formed a bull candle, indicating buying demand emerging from the 50-day exponential moving average (EMA) amid global volatility. We expect Nifty to challenge the upper band of consolidation placed at 19,600 and eventually accelerate ongoing pullback in the coming weeks. In the process, Nifty holds the key support of 19,200. Our positive bias is based on the past five weeks’ slower pace of retracement that helped the index to cool off overbought conditions. Also, the global indices have seen a revival in upward momentum after four weeks of decline, indicating the resumption of the trend. The US Dollar Index has faced stiff resistance from an upper band of declining channels.
What should investors do?
BFSI, PSU, pharma may outperform, while IT and metals provide a favourable risk-reward. In large-caps, we prefer Reliance, Kotak Bank, TCS, NTPC, Tata Steel, Havells, Maruti and Sun Pharma. In midcaps, Brigade, PNB, Latent View, Sagar Cements, Hudco, IRCON, Engineers India, KPR Mills look good.
PRITESH MEHTA
LEAD TECHNICAL ANALYST, YES SECURITIES
Where is Nifty headed this week?
Recent corrective action pegged Nifty near its support zone, despite Bank Nifty’s underperformance and lack of strength in select index biggies. The index managed to hold on to support of 19,250 zone. The reversal in our customised breadth and Nifty top 10 index will offer interesting opportunities in select index stocks. Stability is expected to return in Bank Nifty. Point and figure charts show potential triple top buy above the 44,520 zone. Moving above the same would result in a pullback move in banks.
What should investors do?
IT and auto indices will be an interesting theme going ahead. Both are showing signs of outperformance against the benchmark index. Though the Nifty PSE index is trading at an all-time high, its relative chart versus Nifty shows more room on the upside for public sector enterprises. The ratio has confirmed a break above the April 2020 peak. A multi-year basing pattern suggests a continuation of the outperformance of PSEs. Maruti, Persistent and BEL will likely stage a rally between 8-10%.
RAJESH PALVIYA
HEAD-TECHNICAL & DERIVATIVES, AXIS SECURITIES
Where is Nifty headed this week?
During the week, Nifty formed a bullish candle but remained constrained within the high-low range of the previous week, suggesting a lack of pronounced directional momentum. The chart pattern suggests that if Nifty crosses and sustains above 19,500 level, it would witness buying, which would lead the index towards 19,700- 19,800 levels. However, if the index breaks below the 19,350 level, it would witness selling, taking the index towards 19,200- 19,100. For the week, we expect Nifty to trade in the range of 19,800-19,100 with mixed bias.
What should investors do?
We expect Maruti, M&M, L&T, BHEL, Persistent Systems, LTI Mindtree, Tata Power, NTPC, Canara Bank, PNB, India Cement, and ACC to strengthen in the coming trading sessions. Traders can initiate a moderately bullish strategy with reduced premium outflow and a lower breakeven point called bull call spread of September 14 weekly expiry. The strategy involves buying one lot of 19,450 call strike at Rs 137 and simultaneously selling one lot of 19,700 call strike at Rs 39 so that the net outflow or maximum loss will be restricted up to Rs 4,900. If Nifty closes above 19,548 on expiry, the strategy will start making a profit. However, as the risk is limited, so is the profit. Maximum gains will be restricted to `7,650 because the gains of the long 19,450 strike call will be offset by the sold 19,700 strike call if Nifty closes above 19,700 on expiry.
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