Nifty may hit 16,100, if it crosses 15,750; Bank Nifty remains in uptrend; Infosys, Asian Paints in focus

By Rajesh Palviya

Nifty closed at 15683 with a loss of 8 points on Friday. On the daily chart the index has formed a Bearish candle with a lower shadow indicating buying at lower levels. The index continues to move in a Lower Top and Lower Bottom formation on the hourly chart indicating negative bias. The chart pattern suggests that if Nifty crosses and sustains above 15750 level it would witness buying which would lead the index towards 15900-16100 levels. However if index breaks below 15600 level it would witness selling which would take the index towards 15500-15400. Nifty is trading above its 20 day SMA which indicates positive bias in the short term. Nifty continues to remain in an uptrend in the medium and long term, so buying on dips continues to be our preferred strategy.

Nifty Derivative Outlook

Nifty in the current week has seen Long Unwinding with a price cut of -121 points (-0.76%) and OI shedding of -30.41 lac shares(-25.77%) decreasing from 118 Lac share to 87.59Lac shares. Nifty traded at a premium of 13 points compared to 18 points, while the sentiment indicator PC Ratio is currently trading at 1.18 which is above the median line and in a comfortable zone indicating positive bias. In Nifty the high OI on the CALL side in the weekly expiry scheduled 24th June is at 15,800(39.29L), 16,000(44.65L) & 15,700(36.61L) strike, with 16,000 & 16,200 acting as a strong resistance wherein there has been writing of 8.99Lac shares & 7.61Lac shares respectively while 15,700 is likely to act as a pivotal level wherein there has been addition of 6.84Lac shares.

The high OI on the PUT side is at 15,500(38.07L), 15,600(28.56L) & 15,200(25.68L) strike, with 15,200 & 15,500 acting as a strong support as there has been of writing of 9.51Lac shares & 9.09Lac shares respectively. The tentative range for the current week is likely to be between 15,400 to 16,000. IndiaVix indicator of market volatility is currently at 14.80% Up by 4.93% from 14.10% of last week and has been in downward trajectory from its recent high of 17.96% suggesting confidence and stability in current market trend and further descend from these levels will augment for more of an uptrend in market.

Bank Nifty Outlook

On Friday, Bank Nifty opened with an upward gap and witnessed selling for the first part of the session. However, last hour pullback action pulled the index higher and recovered some of the earlier losses.. Banknifty closed at 34558 with a loss of 47 points.

On the daily chart the index has formed a Bearish candle with a lower shadow indicating buying at lower levels. The index continues to move in a Lower Top and Lower Bottom formation on the hourly chart indicating negative bias. The chart pattern suggests that if Banknifty crosses and sustains above 35000 level it would witness buying which would lead the index towards 35400-35800 levels. Important Supports for the day is around 34000 However if index sustains below 34000 then it may witness profit booking which would take the index towards 33600-33200 levels.. Banknifty is trading below 20 day SMA indicating negative bias in the short to medium term. Banknifty continues to remain in an uptrend in the medium and long term, so buying on dips continues to be our preferred strategy.

The daily strength indicator RSI has turned negative from the overbought territory and is below its reference line indicating sustained downtrend.

Bank Nifty Derivative Outlook

Bank Nifty in current week has seen Long Unwinding with a price cut of -573 points (-1.63%) and OI shedding of -2.47lac shares (-14.70%) decreasing from 16.77Lac share to 14.30Lac shares and traded at premium of 39 points compared to 122 points. In Bank Nifty the high OI on the CALL side in the weekly expiry scheduled 24th June is at 35,000(12.24L), 35,500(10.25L) & 36,000(12.04L) strike, with 35,500 & 36,000 acting as a strong resistance wherein there has been writing of 2.75Lac shares & 3.09Lac shares respectively. The high OI concentration on the PUT side is at 34,000(9.64L), 33,500(8.38L) & 33,000(7.71L) strike, with 33,000 & 33,500 acting as a strong support as there has been of writing of 1.90Lac shares & 3.16Lac shares respectively.

The tentative range for the current week is likely to be between 35,300 to 35,500 with 34,500 acting as an important level as both Call & Put has high OI concentration of 7.67L & 7.17L shares respectively and also have seen significant OI addition of 3.42L & 1.48L shares.

Stocks to watch this week

We believe the IT, Pharma & Healthcare, Insurance, Fertiliser and FMCG sectors can do well in the near term. One can focus on stocks like HDFC Life Insurance Company, Mcdowell Holdings, Asian Paints, Thyrocare Technologies, Glenmark Pharmaceuticals, Infosys, Chambal Fertilisers Chemicals, can do well in near term.

(Rajesh Palviya is Vice President– Research (Head Technical & Derivatives) at Axis Securities Limited. The views expressed are the author’s own. Please consult your financial advisor before investing.)