Siddarth Bhambre, Director – Alternative Investments and Research, InCred Equities
Will the Nifty hit 16,000 this week?
Historically, after consolidation the primary trend resumes, which is upwards. Heavyweight stocks’ movement and stronger-hand activity suggest positive bias in the Nifty may continue for some more time with strong support around 15,550-15,600 levels.
What should investors do?
With implied volatility of Nifty calls now below 12%, traders should play for upside buying calls instead of futures. Volatility traders should avoid writing options. The banking sector has shown a decent bounce but barring Axis Bank, we haven’t seen any major formation of long positions. HDFC Bank continues to underperform. One should not get carried away by the recent upmove in the banking index. IT stocks have decisively moved to form new all-time highs, indicating strength. Metal names, especially Tata Steel, are interestingly placed on charts.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
Will the Nifty hit 16,000 this week?
The underlying trend of the Nifty remains intact and more upside towards 16,000 is likely this week before showing another minor downward correction from the highs. A decisive move above 15,900 could open more upside towards 16,200-16,300 in the near term. Immediate support is placed around 15,650.
What should investors do?
Banking, especially PSUs, metal and IT sectors are expected to outperform. Among participants, Axis Bank, ICICI Bank, SBI, Bank of Baroda, Tata Steel, Jindal Steel, TCS and Tech Mahindra are likely to outperform in the next one month. We recommend a Nifty bull spread. One can buy 16,000 call of July 29 expiry at Rs 180 and sell 16,200 call of July 29 expiry at Rs 99. The maximum profit would be Rs 5,950 and the risk would be Rs 4,050. The breakeven would be at 16,081.
Navneet Daga, Senior Derivatives Analyst, Institutional Equities, YES Securities
Will the Nifty hit 16,000 this week?
There is around 70% probability of Nifty hitting the 16,000 mark this week, as the dominance of put writers along with possible breakout from congestion zone will push call writers to cover their positions.
What should investors do?
Renewed momentum in banking and metals is likely to continue; investors can buy Tata Steel with a target of Rs 1,220 and SBI with a target of Rs 450 as fresh long buildup was seen on first day of July series after large consolidation in June. Investors should remain cautious of investing in Asian Paints, Pidilite and RIL as exhaustion of price momentum was seen after rally in June. On a short-term basis, traders should look to book profits in these stocks. We recommend a bull call spread in Bank Nifty. One can buy 35,500 call and sell 36,000 call. Post the breakout and close above 35,300, we expect further momentum in Bank Nifty and a push towards the 36,000 mark in the next few days.
