JAYESH BHANUSHALI
SENIOR DERIVATIVE AND TECHNICAL RESEARCH ANALYST, IIFL
Nifty has crossed all previous hurdles. What’s next? Where is the index headed?
The thunderous rally in equities continues to be fuelled by a weak US dollar, which has resulted in FPIs pumping in Rs 90,000 crore in the last 45 days. Nifty may see a range-bound move in the coming week and has limited upsides. The levels of 13,610 and 13,675 may act as key resistance points, while there are very strong supports at 13,350 and 13,210 levels.
What should investors do?
Nifty at current levels on all fronts — valuations, quantitative and technical factors — is overheated and one should act with utmost caution and avoid excessive large leveraged exposures, as Nifty remains prone to some corrective moves provided FPI flow slows down. We continue to remain bullish on FMCG, pharma and IT sectors while banking and metals are a bit overheated.
ABHILASH PAGARIA
SENIOR MANAGER, EDELWEISS ALTERNATIVE RESEARCH
Nifty has crossed all previous hurdles. Where is the index headed?
Nifty continues to trade in a strong higher-top higher-bottom chart structure and has managed to retrace more than 261.8 per cent retracement of its previous down move. Tracking the FPI activity in the index futures segment, the long/short ratio continues to remain elevated above 3x level however the quantum of their total open positions are still around the mean levels, suggesting that there could be further steam left on the upside. We expect the Nifty to trade with a positive bias and test our immediate target of 13,700 during the December series.
What should investors do?
On the Nifty options front, throughout the previous week, despite a 2 per cent delta move in the index, option writing activity is gaining momentum in the out of the money strikes of both call and put option strikes, indicating a range-bound activity going forward. We are expecting Nifty to trade with a positive bias in a narrow trading band so creating short gamma positions with caped wings could provide positive payoffs.
RAJESH PALVIYA
HEAD – TECHNICAL AND DERIVATIVES AT AXIS SECURITIES
Nifty has crossed all previous hurdles. Where is the index headed?
Nifty is forming higher highs since last six weeks indicating a strong uptrend. As per weekly options data, heavy put writing on lower strikes, ranging from 13,200 to 13,500, is witnessed which shows Nifty might face support in the zone of 13,350 as maximum put OI is placed here for the weekly expiry. We can witness short-covering move along with the addition of fresh positions only if Nifty breaches 13,600. The mid-cap and small-cap indices are also showing strength it indicates broad-based buying interest in the market and we expect this rally to continue further. If Nifty crosses and sustains above 13,600 level it would witness buying which would lead the index towards 13,760-13,850 levels. However, if the index breaks below 13,350 levels it would witness selling which would take the index towards 13,100-13,000.
What should investors do?
The chart pattern suggests that the weekly strength indicator RSI and momentum oscillator Stochastic have both turned positive and are above their respective reference lines indicating positive bias. Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. We expect banking and financial, pharma, PSU stocks and oil and gas sector to do well in the coming weeks.
