Benchmarks Skilled and Sensex maintained their momentum and closed at record highs on Friday. This marked Nifty’s best week in two months, extending its winning streak to 12 consecutive sessions.
The 30-share BSE Sensex index rose 231 points, or 0.28 per cent, to close at 82,365, while the broader NSE Nifty index gained 84 points, or 0.33 per cent, to close at 25,235. This is the third consecutive day that the Nifty index has closed at a record high.
Analyst Sudeep ShahDeputy Vice President and Head of Technical and Derivatives Research at SBI Securities, discussed the Market outlook as well as specific stocks and sectors for the new series with ET Markets. Below are edited excerpts from their conversation:
Nifty remains above 25k mark and analysts believe he New all-time highs are expected to be reached in the near future. What do you think about this?
In August, the Nifty saw significant volatility, with 12 trading sessions opening with a significant gap up or down. Over the month, it has fluctuated in a range of 1,300 points, underlining the heightened volatility in the market. Despite this, the index reached new all-time highs and closed the month above the important psychological level of 25,200. Most notably, for the third consecutive month, the index has ended on a positive note. On a monthly scale, it has formed a bullish candle with a long lower shadow, indicating buying interest at a lower level. The consistent sector rotation has played a crucial role in supporting the market and sustaining these elevated levels. During the month, Nifty IT, Nifty Pharmaceuticaland Nifty Healthcare have far outperformed the blue-chip indices. We believe that these sectors are likely to continue their northward journey in the coming trading sessions. Coming back to Nifty on Thursday, the index has given a break of the horizontal trend line on a daily scale, which is a bullish signal. Momentum indicators and oscillators are also supporting the overall bullish chart structure. The daily and weekly RSI are in the super bullish zone as per the RSI range shift theory. The daily MACD histogram suggests a pick-up in bullish momentum. In terms of levels, the index is likely to test 25,600, followed by 25,800 in the near term. On the downside, support has shifted to the upside to the 24,900-24,850 range.
As the August expiry draws to a close, OI’s monthly data shows 52,000 call option writers with a strike price of 25,200 ITM and then 24,200 call option writers with a strike price of 25,300. For put option writers, the highest concentration is also at 25,200, followed by 25,100 strike prices. How to read this data for the September monthly expiry?
There is a noticeable concentration of buy side open interest at the strike price of 25500, followed by the strike price of 25700. While a significant open interest is observed on the sell side at the strike price of 25200, followed by the strike price of 25000. Based on the ATM strike price Straddle cost, the range for the next few trading sessions will be between 25477-24990 level.
On the weekly series, the highest call option selling level is located at 25,200, followed by 25,500. Since the index traded above 25,200 for a significant portion of Friday’s session, what is the significance of the 25,200 level?
Call option writers may be anticipating that the markets are currently overextended and could see a pullback towards 25,000 in the coming trading sessions. The strike price of 25,200-25,300 has the highest open interest for this week’s expiry. Factoring in the option premiums, the risk for option sellers increases above the 25,400-25,430 range.
Even though Nifty opened with a gap higher, there has been no significant liquidation of positions as there has been no substantial follow-through buying. Therefore, significant short-covering is likely to occur once Nifty manages to break out and sustain above the 25,400-25,430 range.
Currently, Nifty IT is at a record high and seemingly unaffected by the global sentiment. What are your thoughts on it?
On a weekly scale, Nifty IT has given a breakout of the Stage 2 Cup pattern. The depth of the pattern is 34% and the width is 131 weeks. Momentum indicators and oscillators are also supporting the overall bullish chart structure.
Do you have any recommendations on IT stocks to trade or accumulate in the medium to long term?
LTIM: The stock has experienced a weekly consolidation breakout. This breakout is confirmed by the previous 50-week average volume. Moreover, it has formed a sizeable bullish candle on the breakout week, which adds strength to it. Currently, it is trading above its short- and long-term moving averages.
These technical factors are aligned in favour of the bulls. Therefore, we recommend accumulating the stock in the 6150-6100 zone with a stop loss of Rs 5880. On the upside, it is likely to test the 6500 level, followed by 6750 in the medium term.
Reliance held its annual general meeting on Thursday. What is your view on the stock after the upgrade and what is your assessment of its technical positioning?
Reliance Industries Over the past two weeks, the index has been significantly underperforming its blue-chip indices. Currently, the Nifty is trading at an all-time high, while the Reliance is trading below its all-time high by more than 5%. The Reliance-Nifty ratio chart is at the lowest level in the last 158 days, clearly showing underperformance.
Trento and BEL will be added to the Nifty 50 index from September 30. Do you have any recommendations for positions in these stocks?
Technically, Trent is in a strong uptrend. The 6850-6800 zone will act as immediate support for the stock. As long as it stays above the 6800 level,
Popular actions include: Online paymentIt hasn’t been a great year for the company. However, with the Ministry of Finance’s approval for its payment services business, the stock could see some relief. Do you have any comments on this update and any recommendations for traders?
These averages have started to turn up, which is a bullish sign. Most notably, the weekly RSI broke above the 60 mark for the first time since October 2023, a bullish sign.
Do you have any suggestions for a broader sector to consider?
Technically, the IT, pharmaceutical, healthcare, financial services and telecommunications sectors are showing strong potential.
Would you like to recommend any stocks within or outside of these sectors?
Technically, LTIM, PCNTBAJAJFINSV, LAURUSLABS, LALPATHLAB, CIPLAand CHROME It looks good in the short term.
(Disclaimer: The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of Economic Times)
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.