By Rajesh Palviya
Nifty started the week on a negative note but witnessed buying at lower levels to end the last week of CY2021 on a positive note. Nifty closed at 17354 with a gain of 350 points on a weekly basis.
The weekly strength indicator RSI is below its reference line while the daily RSI has turned bullish indicating rising strength.
Nifty 50 index derivative outlook
Nifty Futures closed at a discount of 8 points compared to the previous day premium of 14 points. FIIs were buyers in index futures to the tune of Rs 884 crore and were sellers in index options to the tune of Rs 3,238 crore, buyers in the stock futures to the tune of Rs 1,140 crore. While net sellers in the derivative segment to the tune of Rs 1,733 crore.
India VIX index was at 16.22 as compared to 16.57. Nifty ATM call option IV was currently at 12.86 whereas Nifty ATM Put option IV was quoting at 13.64. Index options PCR was at 1.41 as compared to 1.32 and F&O Total PCR was at 0.94.
Nifty Put options OI distribution shows that 17200 has highest OI concentration followed by 17300 & 17100 which may act as support for current expiry. Nifty Call strike 17500 followed by 17700 witnessed significant OI concentration and may act as resistance for current expiry.
Bank Nifty Outlook
Bank Nifty started the week on a negative note but witnessed buying at lower levels to end the week on a strong note. Bank Nifty closed at 35482 with a gain of 625 points on a weekly basis.
On the weekly chart the index has formed a bullish candle forming higher High-low compared to previous session indicating positive bias. The index is moving in a Higher Top and Higher Bottom formation on the daily chart indicating a short term up trend. The chart pattern suggests that if Bank Nifty crosses and sustains above 35600 level it would witness buying which would lead the index towards 36000-36500 levels. However if the index breaks below 35100 level it would witness selling which would take the index towards 34700-34200. On the daily chart, Bank Nifty is now sustaining below its 50, 100 and 200 day SMA indicating negative bias in the short term. Bank Nifty continues to remain in a downtrend in the short to medium term, so selling on rallies continues to be our preferred strategy. For the week, we expect Bank Nifty to trade in the range of 36600-34700 with a positive bias.
The weekly strength indicator RSI was moving downwards and was quoting below its reference line indicating negative bias. However, on the daily chart, it has turned bullish representing a bounce back rally.
Bank Nifty derivative outlook
Bank Nifty closed at 35628 on positive note with a 2.57 per cent increase in open interest indicating Long Build Up. Bank Nifty Futures closed at a discount of 11 points compared to the previous day premium of 21 points.
Bank Nifty Put options OI distribution shows that 35000 has highest OI concentration followed by 35200 & 35300 which may act as support for current expiry. Bank Nifty Call strike 35000 followed by 36000 witnessed significant OI concentration and may act as resistance for current expiry.
Sectors, stocks to focus this week
We expect IT, realty, chemical, pharma and capital goods to do well in the near term. One can focus on stocks like HCL Technologies, Birlasoft, Larsen Toubro Infotech (LTI), Sun Pharmaceutical Industries, Eicher Motors, DLF, Dr. Reddy’s Laboratories, Lupin, Deepak Nitrite, Laxmi Organic Industries may show strength in near-term.
(Rajesh Palviya, VP– Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)