Move above 17,300 could take Nifty towards 17,800: Analysts

Technical analysts expect the Nifty to test 17,300 in the short term after the index closed above the 17,000-mark for the first time in nearly two months on Friday. The Nifty ended with a gain of 2.6% last week at 17,158.25. If it crosses 17,300, a further upmove towards 17,800 cannot be ruled out, said analysts.


Where is the Nifty headed?
The Nifty has surpassed 17,000 and should go towards 17,300 next. If 17,300 is surpassed, we should not rule out 17,800. 17,800 should be a major resistance. The recent upmove comes on the back of short-covering and appears more like a technical bounce.

What should investors do?

The market advance is in late stages and sectors and stocks that were lagging are beginning to move up now. This is a great opportunity to correct ones portfolio — move from weak names to strong names. Increasing one’s cash level at higher levels will also be an apt strategy. Over the next few days metals and IT stocks will do well.



Where is the Nifty headed?
The index has formed bullish candles on daily and weekly scales with a decisive hold above 17,000 zones which indicates strength in the ongoing market trend. Falling volatility with a rising put-call ratio indicates bullish market stance with smoother ride. Now till Nifty holds above the 17,000 zones, this momentum could extend towards 17,500-17,777 zones; while on the downside major support exists at 16,888 and 16,750.

What should investors do?

Investors can use this move to add good quality stocks from financial, FMCG, cement and banking sectors while traders are suggested to play with move towards 17,500 zones with buy on any small decline. One can go with the Bull Call Spread by buying 17200 Call and selling 17500 Call to play the move towards 17,500 zones. Stock specific positive stance in

, , PVR, ACC, , , , HDFC, and .


Where is the Nifty headed?
On weekly chart, Nifty has formed a long bullish candle forming higher high-low compared to the previous week, and has closed above previous week’s high, indicating positive bias. Nifty has now managed to cross and sustained above all its important long-term (20-, 100- and 200-day) moving averages which indicates the index is likely to be bullish. Chart pattern suggests if Nifty crosses and sustains above 17,200 levels it would witness buying which would lead the index towards 17,400- 17,700 levels. However, if the index breaks below 17,000 levels, it would witness selling which would take the it towards 16,800-16,600. The daily and weekly RSI is moving upwards and is quoting above its reference line indicating positive bias..

What should investors do?

We expect sectors like banking & financials, automobiles, FMCG, fertiliser and chemicals to witness buying this week. One can focus on stocks like

, , Bajaj Finance, HDFC Ltd, , Eicher, Dabur, HUL, , Adani Ent, , UPL, . We are suggesting a Short Straddle for weekly expiry scheduled on 4 August amid expectation of some consolidation in Nifty after the strong up-move last week. The strategy involves selling of 17,200 Call and 17,200 Put, one lot each having premium of 110 and 136, respectively, making a total premium inflow of `12,300 (246 points). As it’s a credit spread, from profit perspective this strategy can generate max profit to the extent of premium received if Nifty trades and conclude the expiry in the range of breakeven points; while the loss can be unlimited if Nifty breaches the upper breakeven level of 17,446 or the lower breakeven level of 16,954 and sustains on either side on expiry day. It’s advisable to maintain a combined premium stop loss of 380-400 points to avoid unlimited losses if Nifty makes a strong move in either of the directions.

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