If Nifty holds above 14,900, it may touch 15,200, Bank Nifty to remain in positive range; TCS, Airtel in focus

The chart pattern suggests that if Nifty crosses and sustains above 14900 levels it would witness buying which would lead the index towards 15000-15250 levels

By Rajesh Palviya

Nifty started the week on negative note however buying momentum throughout the week recovered some of the earlier losses to close in positive terrain. Nifty closed at 14823 with a gain of 192 points on a weekly basis. On the weekly chart index has formed a bullish candle and remained restricted within previous week’s High-Low range indicating lack of strength on either side. Since past couple of months index is consolidating within broad range of 15000- 14200 levels representing sideways trend.

The chart pattern suggests that if Nifty crosses and sustains above 14900 levels it would witness buying which would lead the index towards 15000-15250 levels. Important Support for the week is around 14400-14200. Nifty is trading above 20 and 50 day SMA’s which are important short term moving average, indicating positive bias in the short term. Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Nifty to trade in the range of 15200-14600 with a positive bias.

The weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias. However momentum oscillator Stochastic has turned positive from the oversold zone indicating a possible consolidation or an up-move in the near term

Nifty derivative outlook

Nifty in current expiry has seen Short build up with a price cut of -0.42% and OI addition of 20 lac shares increasing from 102.38 Lac share to 122.41 Lac shares , while in Banknifty also there is Short build up with price cut of -2.27% & OI addition of 1.33 lac shares increasing from 13.97 Lac to 15.31 Lac shares. The sentiment indicator PC Ratio is currently trading at 1.33 well above the median line but still in a comfortable zone indicating positive bias. In Nifty the highest OI on the CALL side in the weekly expiry scheduled 12th May is at 15,000 -15,200 & 15,500 strike, with 15,200 & 15,400 acting as a strong resistance wherein there has been writing of 11.34Lac shares & 8.44 Lac shares respectively. The highest OI on the PUT side is at 14,500 -14,600 & 14,800 strike, with 14,500 & 14,600 acting as a strong support provided Nifty closes & sustains below 14,800 as there has been of writing of 17.83Lac shares in the said strike clearly indicating a strong support level.

Bank Nifty outlook

Bank Nifty started the week with a downward gap however short covering along with buying support at lower levels recovered some of the earlier losses. Bank Nifty closed at 32905 with a gain of 123 points on a weekly basis. On the weekly chart the index has formed a small Bullish candle with shadows on either side indicating indecisiveness amongst participants regarding the direction. The index is moving in a Lower Top and Lower Bottom formation on the daily chart indicating negative bias.

The chart pattern suggests that if Bank Nifty crosses and sustains above 33500 level it would witness buying which would lead the index towards 34000-34300 levels. However, if the index breaks below 32500 level it would witness selling which would take the index towards 32000-31500. Bank Nifty is now well placed above its 20 SMA indicating positive bias in the short term. Bank Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 34500-32500 with a positive bias.

The weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias. However momentum oscillator Stochastic has turned positive from the oversold zone indicating a possible consolidation or an up-move in the near term

The trend deciding level for the day is 32980 If BANKNIFTY trades above this level then we may witness a further rally up to 33185-33465-33675 levels. However, if BANKNIFTY trades below 32980 levels then we may see some profit booking initiating in the market, it may correct up to 32700-32490-32210 levels.

Bank Nifty derivative outlook

BankNifty is having highest OI on the CALL side in the weekly expiry at 33,000 -33,500 & 34,000 strike, with 34,000 acting as a strong resistance wherein there has been writing of 4.89Lac shares, while on the PUT side highest OI is at 32,000 & 31,000 strike, with 33,000 acting as a pivotal level for this weekly expiry as there has been addition of 4.66Lac shares on CALL side & 4 Lac addition on PUT side suggesting that any sustain move on either side of this level will decide the trend in Banknifty. IndiaVix is currently at 20.82 % and has been in downward trajectory from its recent high of 24.54% suggesting confidence and stability in current market trend and further descend from these levels will augment for uptrend in market.

Sector and stocks in focus this week

We expect Pharma, Healthcare, IT, Metal and Oil & Gas sectors to do well in the near term . One can focus on stocks like Glenmark Pharmaceuticals, Lupin, JSW Steel, MOIL, TCS, Wipro, Bharti Airtel, Adani Ports, CESC for near term bullish trend.

(Rajesh Palviya is the Deputy 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.)