NAGARAJ SHETTI
SENIOR TECHNICAL RESEARCH ANALYST, HDFC SECURITIES
Where is the Nifty headed?
The market is currently witnessing choppy movements. One may expect Nifty to slide down to 17,000-16,800 levels in the near term. A move below 16,800 could open the next downside target of 16,400.
What should investors do?
Investors may look to lighten long trading positions or place strict stop loss in longs. Small trading buy positions can be created in large-cap FMCG and metal with strict stop loss. Hedging can also be done by buying puts of Nifty and creating Bear Spread strategy. We advise for creating short positions in the index and stocks in IT, realty and pharma. In the Nifty Bear Spread strategy one can buy 17,200 put option expiring February 24 at Rs Rs 150 and sell 17,000 put expiring February 24 at Rs 93 with maximum profit at Rs 7,150 and risk of Rs 2,850.
SIDDARTH BHAMRE
DIRECTOR-ALTERNATIVE INVESTMENTS AND RESEARCH, INCRED EQUITIES
Where is the Nifty headed?
It’s interesting to see that in the last 3 sessions, intraday volatility has reduced with decline in volumes but implied volatility has increased. Nifty implied volatility at 23% and Bank Nifty’s near 30% are on the higher side. This certainly reflects fear among market participants. Also, FIIs have been forming long positions in index futures which has taken their net index longs near to 60%. FIIs forming longs strongly suggests one should not be short in this market. However, price is the most important parameter and the market has been hitting the 17,000 support repeatedly which does not augur well. We maintain our stance of staying light with an eye on catching the up-moves.
What should investors do?
Quite a few auto, banking and some of the large-cap FMCG stocks are nicely positioned for a breakout. With the overall data positive, and market still above support zone, we suggest going long stock specific in this market.
ROHIT SRIVASTAVA
FOUNDER, INDIACHARTS.COM
Where is the Nifty headed?
Nifty made a double bottom near 16,800 last week. This should be the bottom end of the range and we should hold above it. Once the dust settles, the momentum to the upside should pick up and we should head back to 17,600 in the short term, and back to 18,050 in the coming weeks. Bank Nifty has also made a double bottom near 36,500 in January and the key short-term resistance is at 38,300 and above that we would head back above 40,000. Overall, the market gets oversold near the 17,000 mark and declines are opportunities for the bulls.
What should investors do?
Investors should focus on the outperforming sectors. The Nifty Auto index is holding out better and within that outperformance is clear in the two-wheeler stocks. In the banking space, PSU banks have done well year to date and should remain in focus. The metals index has some short-term downside risk before expiry but should eventually gain momentum and needs some patience. We should see interest coming back to PSU stocks. Large-caps like RIL and HUL could gains in the index as they also formed a double bottom between January and February
