RAJESH PALVIYA
HEAD TECHNICAL DERIVATIVES, AXIS SECURITIES
Where is Nifty headed?
On the weekly chart, the index has formed a long bullish candle, forming a higher high-low compared to the previous week, and has also closed above the same, indicating a positive bias. If Nifty crosses and sustains above the 21,600 level, it would witness buying, which would lead the index towards 21,700-21,800 levels. An important support is around 21,300-21,000. Derivative data indicates above 21,550, we may witness short covering, which could fuel another round of rally in the market in a short period of time.
What should investors do?
We expect stocks like Infosys, TCS, LTI Mindtree, Bank of Baroda, ICICI Bank, DLF, Godrej Properties, NTPC, Power Grid, UltraTech, Ramco Cement, Aarti Industries, UPL and NOCIL to show good momentum in the coming week. We are suggesting a market-neutral strategy called Long Straddle, which involves buying one lot of 21,500 Calls and 21,500 Puts at Rs 123 and Rs 116, respectively, with a total outflow of Rs 11,950. As it’s a debit spread, from a profit perspective, this strategy can generate theoretically unlimited profit. At the same time, the loss is restricted to the total premium paid if Nifty closes at 21,500 on expiry. If Nifty on expiry closes above 21,739 or the lower breakeven level of 21,261 and sustains on either side, then the profit can be unlimited. It’s advisable to maintain a combined premium stop loss of 100-80 points.
AJIT MISHRA
SVP-RESEARCH, RELIGARE BROKING
Where is Nifty headed?
Nifty has been inching higher for seven consecutive weeks and trading at record-high levels. Going ahead, prevailing buoyancy in US markets and rotational buying across the key sectors would continue to drive the markets higher, with marginal consolidation in between. We are eyeing 22,150 next and expect 20,700-21,000 zone to act as support in case of any profit-taking. We suggest continuing with the “buy on dips” approach and giving preference to banking and IT majors for long trades. Though the broader indices are also trading in sync with the trend so far, we suggest maintaining caution in the selection of stocks and advising to trail stop losses on the rise.
What should investors do?
Based on technical parameters, we expect stocks like Asian Paints, Bajaj Finserv, IndusInd Bank, Infosys, Kotak Bank, Mphasis, Naukri (Info Edge), SBI and Tata Steel to perform well. Asian Paints is set to end a 2-year long consolidation phase. Bajaj Finserv has seen a fresh breakout from a triangle pattern. IndusInd Bank is inching gradually higher after forming a base at `1,500. Infosys has crossed the hurdle of the previous swing high. Kotak Bank is witnessing a steady up-move after breakout from a reversal pattern. Mphasis crossed the hurdle around the Rs 2,550 zone. Naukri ended a 2-year long consolidation phase. SBI has a fresh breakout from a consolidation range.
PRITESH MEHTA
EXECUTIVE VICE PRESIDENT- INSTITUTIONAL RESEARCH, YES SECURITIES
Where is Nifty headed?
The base of the index continues to shift higher, and immediate support is seen around the three-digit Gann number of 211(00). When a momentum-driven market starts taking control of the proceedings, focusing on upside targets won’t be the right approach. This up-trending market could go more towards a three-digit Gann number of 218(00). Yet, extremely customised breadth readings and widened disparity between price and average will come into play in the second half of the week. So, trailing stop losses are advised.
What should investors do?
The ratio of IT vs Nifty is back to around the Sept ’23 peak; a breakthrough above the same would result in a continuation of the outperformance of IT names. Though large-caps within this space have participated, our customised midcap IT index continues to outperform the Nifty IT, implying further strength in LTI Mindtree, L&T Technology Services and Persistent Systems. SBI contributed to a sharp rally in the PSU banking space as it surpassed its peak of Dec ’22. Yet, a breakthrough above the Feb ’23 high on the ratio of SBI vs BankNifty would only result in SBI’s outperformance.