By Rajesh Palviya
NSE Nifty 50 closed at 17758 with a gain of 60 points on a weekly basis on Friday. On the weekly chart the index has formed a bearish candle with an upper shadow indicating selling at higher levels. The chart pattern suggests that if Nifty crosses and sustains above 17800 levels it would witness buying which would lead the index towards 18000-18300 levels. However if the index breaks below 17700 level it would witness selling which would take the index towards 17500-17300. For the week, we expect Nifty to trade in the range of 18300-17400 with mixed bias. The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias however the negative crossover on the daily chart signals price correction.
Bank Nifty Outlook
Bank Nifty closed at 38986 with a loss of 56 points on a weekly basis. On the weekly chart the index has formed a Bearish candle with a long upper shadow indicating profit booking as well as resistance at higher levels. The chart pattern suggests that if Bank Nifty crosses and sustains above 39300 level it would witness buying which would lead the index towards 39800-40400 levels. However if the index breaks below 38700 level it would witness selling which would take the index towards 38000-37600. For the week, we expect Bank Nifty to trade in the range of 40400-37600 with mixed bias. The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias however the negative crossover on the daily chart signals price correction.
Sectors, stocks to watch this week
We expect sectors like Capital goods, Chemical, Banking and Real estate may show bullishness in near term. One Can focus on stocks like Siemens, Thermax, ICICI Bank, Kotak Mahindra Bank, DLF, Godrej Property, SBI, Deepak Nitrite, SRF, UBL, Adani Port.
Also Read: Buy these two stocks for gains while Nifty forms bearish pattern on daily charts, support at 17500
NSE Nifty 50 trading strategy for 15 August weekly F&O expiry
The strategy which we are suggesting for the weekly expiry scheduled on 25th August is a Bearish strategy namely PUT LADDER, which involves buying of one lot of Nifty 17,750 PUT @ 122 & selling of one lot each of 17,600 PUT @ 70 & one lot of 17,450 PUT @ 37. The maximum profit of Rs 6,750 will be attained at 17,600 levels, while strategy will start making loss below 17,300. The cost of the strategy involves outflow of Rs 750 which is the maximum loss if Nifty closes & remains above 17,300 levels on expiry, however any sharper movement on lower side could result in losses and hence it’s advisable to exit the strategy in total below 17,300. Break Even points of the strategy are 17,735 on Upside & 17,285 on the lower side.
(Rajesh Palviya, Vice President – Research ( Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)