Alternative Investments

Nifty: Nifty has to hold above 17,000 to head higher: Analysts

Technical analysts said Nifty has to sustain above 17,000 in the last trading week of the year for it to head higher to 17,200 or higher levels. India’s benchmark indices gained 0.2% last week, outperforming China, South Korea, and Singapore markets. Trading volumes will be light due to year-end holidays in global markets. The Nifty is likely to find support at 16,800 in the coming week.


Where is the Nifty headed?
Nifty recently had a pullback and recouped some of the losses amidst volatility and managed to close with a marginal gain. It formed a bullish candle on the weekly scale with a long lower shadow indicating buying was seen at declines, but hurdles are intact at higher zones. Now it has to hold above 17,000 zones, for an up move towards 17,200 and 17,350 zones whereas support can be seen at 16,900 and 16,800 zones. Till the Bank Nifty holds below 35,000, weakness could be seen towards 34,500 and 34,350 zones whereas hurdles can be seen at 35,350 and 35,500 zones.

What should investors do?

Index traders can initiate a Bear Put Spread by buying 17,000 Put and selling 16,800 Put with a premium cost of around 64 points to play the downside move. Stock-specific positive setup seen in Coforge, HCL Tech and L&T Infotech while weakness could continue in banking and financial stocks


Where is the Nifty headed?

Nifty has been witnessing a lack of faster retracement signifying prolonged consolidation in the broader range of 17,200-16,600 amid positive bias. We believe, only a decisive close above 17,200 backed by improvement in market breadth would lead to an extension of the pullback towards 17,500 in the coming weeks, else extended consolidation amid stock specific action would help the index form a higher base and gradually set the stage for next leg of the up move.

What should investors do?

Nifty has approached maturity of price-time wise correction. Price-wise, the index has maintained the rhythm of not correcting more than 11% on three occasions since May 2020. Time-wise, it has arrested secondary correction within nine weeks. In the current scenario, pricewise Nifty has corrected 11.8% and time-wise completed nine weeks corrective phase, thereby offering favourable risk-reward over the medium term. The maturity of pricetime wise correction makes us confident that Nifty would hold last week’s panic low of 16,400 in the near term. Any dip from here on should not be construed as negative instead dip should be capitalised to accumulate quality stocks in a staggered manner. Sectorally, capital goods, IT, telecom, real estate are expected to endure their outperformance while auto and metals have a favourable risk-reward setup. On the stock front, we remain constructive on Reliance, TCS, Tata Motors, Siemens with 5% upside while in the mid-cap space we prefer L&T Infotech, Gateway Distriparks, Tata Communication, Minda Corp, Brigade for a 7-8% upside


Where is the Nifty headed?

Nifty may gyrate around 17,000 for the coming week. Firstly, less market participation due to holidays and secondly, options traders have positioned themselves on the short side of the 17,000 straddle indicating a range-bound movement for Nifty with a focal point around 17,000. Even if Nifty goes 200-300 points below or above from 17,000 it won’t change much from a directional perspective.

What should investors do?

In the current scenario, adopting an evergreen stock-specific approach may give fruitful results. Options traders can trade in straddle and strangle while positional traders should concentrate on IT, pharma, power and selective names in the FMCG space. Bank Nifty chart suggests this space can be avoided for some more time to come.

Source link

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button