SRIRAM VELAYUDHAN
VP-ALTERNATIVE RESEARCH, IIFL SECURITIES
Where is the Nifty headed this week?
The April F&O series had started with high futures open interest of `2.2 trillion, largely led by FPI shorting index futures. FPIs’ shorts were about 91% in total share of their open interest in index futures. Extremely oversold conditions and global risk-on have enabled domestic equities to recover smartly. Nifty and Bank Nifty futures are up about 3% each this month, led largely by short covering. Even the FPI selling in cash market has reversed. We believe the momentum in Nifty has the potential to stretch to 17,850 levels this week. We expect financials, especially banks, to lead this up-move.
What should investors do?
As a sign of encouragement, Nifty has closed above the 34 exponential moving average, a key short-term momentum average, and the allimportant 200-day moving average last week. Hence traders with some risk appetite can buy Nifty futures near 17,550 levels for a target of 17,850-17,900 with a stop loss at 17,400. Investors can buy select names like HDFC twins, Kotak Mahindra Bank, UltraTech Cements, Larsen & Toubro, ITC, Titan, and DLF from a medium-term investment horizon.
CHANDAN TAPARIA
ANALYST-DERIVATIVES, MOTILAL OSWAL FINANCIAL SERVICES
Where is the Nifty headed this week?
Technically, the index has been moving in a falling channel for the last couple of weeks and after respecting the lower band, it has now come to the upper band of the channel. Bulls seem to be back with higher shift in trading range but require some consolidation near supply zones to commence the next leg of the rally. It formed a bullish candle with a long lower shadow on weekly frame, indicating buying at support zones. Now it has to hold above 17,500 to extend the move towards 17,777 and 17,900 zones; while on the downside, supports shift higher at 17,442 and then 17,300. India VIX has been falling in line with the decline in CBOE VIX for the last six trading sessions.
What should investors do?
Bank Nifty also formed higher highs – higher lows for the last five sessions and recovered by more than 2,000 points from 39,250 to 41,250. Now it has to continue to hold above 40,750 for an up-move towards 41,500-41,750; while on the downside, support shifts higher at 40,750 than 40,500. Sector-wise bullish formations are seen in banking, financial, FMCG, and capital stocks. Stock-wise positive setup in HDFC Bank, HDFC, L&T, Dr. Reddy’s, IEX, and Tata Motors.
RAHUL SHARMA
HEAD- TECHNICAL & DERIVATIVE RESEARCH, JM FINANCIAL SERVICES
Where is the Nifty headed this week?
Nifty 500 has confirmed a breakout from the downward-sloping channel, which started in December 2022. Nifty 50 is yet to give this breakout. We feel this will happen sooner than later. Projected targets for the current pattern in Nifty are seen at 17,800- 18,200. One can stay long and look to add on dips down to 17,400-17,300. The banking index, the spearhead of the entire market, has dropped its open interest from 2.36 lakh contracts at March end to 1.14 lakh contracts as of last week – a whopping drop of 51%, most of which is on short covering. Bank Nifty can see a fresh breakout if 41,300 is taken out decisively. On the flip side, if any correction happens to 40,200, it can be a good re-entry opportunity for long trades.
What should investors do?
Investors are advised to stick to banks, financial services & capital goods for high momentum, while metals can be ideal reversal candidates from the current levels. Our top picks on the long side are ICICI Bank (Target Rs 925, stop loss Rs 845), Bajaj Finance (TP Rs 6,250 SL Rs 5,780), and ABB (TP Rs 3,600 SL Rs 3300). Bata India remains a short candidate if Rs 1,380 breaks, one can expect a quick slide of another 6-7%.
