Rahul Sharma, Head, Technical & Derivatives Research, JM Financial Services
Is Nifty likely to fall further this week?
The Dollar Index (DXY) is heading higher towards the 93-93.5 range which should keep emerging markets subdued. Consolidation is likely to continue on the back of low institutional activity along with good retail/HNI (high networth individuals) activity in cash counters. July series range is seen at 15,450 -16,000. Immediate support is placed at 15,660 while resistance is expected at 15,850/15,915.
What should investors do?
Nifty is expected to consolidate until it breaches 15,660 or 15,915 on either side. Traders can look to buy ATM (at the money) call options near support levels for Nifty targets of 15,850/15,915. Positional traders can initiate a short strangle in July monthly expiry with 15,500 Puts and 16,000 Calls, combined premium of which is around Rs 175. One can maintain a stop loss of 16,200 and 15,300 for the strangle. The sectors which are exhibiting strength are PSUs, pharma/healthcare and auto. Our top delivery picks are (stop loss Rs 110) and (stop loss Rs 290) for a potential upside of 15% to 20% from the current levels.
Rajesh Palviya, head -Technicals & Derivaticesm Axis Securities
Is Nifty likely to fall further this week?
On weekly chart, the index has formed a bearish candle and remains within a range of 15,900-15,400 indicating indecisiveness amongst the market participants. The index is moving in a Higher Top and Higher Bottom formation on weekly chart, indicating positive bias. Chart pattern suggests that if Nifty crosses and sustains above 15,800 level, it would witness buying which would lead the index towards 15,900-16,300 levels. However, if the index breaks below 15,600 level, it would witness selling which would take the index towards 15,400-15,300. The tentative range for the current week is likely to be between 15,500 and 16,000. India Vix is currently at 12.08%, it is almost near the lowest levels for the last one year, indicating strong confidence and stability in the current market trend.
What should investors do?
Infosys, Tech Mahindra, Dr Reddy’s, Aurobindo Pharma, Deepak Nitrite, Navin Fluorine, Dabur, and may show strength in the coming trading sessions. We are suggesting a bullish strategy for Bank Nifty called call ladder, which involves buying one lot of Bank Nifty 34,800 Call at Rs 298 and selling of one lot 35,500 Call at Rs 61 and one lot 36,200 Call at Rs 14. All the options have weekly expiry of July 8. The maximum profit of Rs 11,925 (477 points) will be attained at 35,500 levels, while the strategy will start making a loss above 36,667. The cost of the strategy involves outflow of Rs 5,575 (223 points) which is the maximum loss if Bank Nifty trades and remains below 34,800 at expiry. However, above 36,667 it’s advisable to exit to avoid unlimited losses. Break-even points are 36,667 on the upside and 35,023 on the lower side.
Abhilash Pagaria, Senior Manager, Edeweiss Alternative Research
Is Nifty likely to fall further this week?
In the near-term we continue to maintain our stance of Nifty trading in a range of 15,470 and 15,970. For the medium term, markets have very strong support at 15,400/15,200 and can swiftly move till 16,450 once we settle above 16,000.
What should investors do?
As we are expecting the markets to trade in a range, traders can look to initiate a Short Strangle option strategy by selling 15,450 Put and 15,950 Call for July 8 weekly expiry. Within sectors, we have a sell-on-rally stance on metals as global commodity is showing topping formation with a major commodity (copper) exhibiting negative divergence and also looks weak as per our quant models. On a moderate bullish side, we like the HDFC twins as they are near strong trend-line supports, while Info Edge is a structurally strong long-term story and is also our stock on radar for Nifty Inclusion. Currently, it is below 1.5 times freefloat market capitalisation requirement.
