ARPAN SHAH
SENIOR RESEARCH ANALYST, MONARCH NETWORTH CAPITAL
Where is Nifty headed this week?
Nifty has closed with a negative candlestick on the weekly chart, and momentum indicators are showing negative divergence on daily chart. As we are heading into the budget week, the market may turn volatile. However, we may see downside towards 20,900-20,500. Bank Nifty will likely trade with a negative bias for the downside targets of 43,800-43,000. Traders should use any rally in the index as a shorting opportunity with a stop loss of 46,000 for Bank Nifty and 21,800 for Nifty.
What should investors do?
PSU stocks HPCL and Indian Oil can trade with negative bias. Insurance companies HDFC Life and ICICI Prudential have given fresh breakdowns, and traders can look to short these stocks. HDFC Bank has closed with negative formation on the monthly chart, and it is likely to underperform the market. Investors should avoid buying this stock. They should instead look to buy SBI as it is trading with higher top higher higher bottom formation, and any dip is a buying opportunity. Metal stocks NMDC and SAIL are top picks from the sector, and they can be added at the current levels.
RAJESH PALVIYA
HEAD TECHNICAL DERIVATIVES, AXIS SECURITIES
Where is the Nifty headed this week?
On the weekly chart, Nifty has formed a bearish candle with a lower shadow, indicating buying at lower levels. If it breaks below 21,250, it will witness selling, taking the index towards 21,000-20,900. However, if it crosses and sustains above 21,500, it would witness buying, leading the index towards 21,600- 21,700 levels. What should investors do?
We can witness bullish momentum in Tata Power, NTPC, ACC, Motherson, Canara Bank, PNB, NMDC, JSW Steel, and BHEL. We are suggesting a market-neutral strategy called Iron Butterfly for weekly expiry on Feb 1. The strategy involves selling one lot of Nifty 21,400 Calls at Rs 190 and selling one lot of Nifty 21,450 Puts at Rs 193 and simultaneously buying one lot each of 21,900 Calls at Rs 34 and 20,950 Puts at Rs 42. Maximum profit of Rs 15,350 will happen if Nifty closes and expires between 21,400 and 21,450. On the other hand, if Nifty on expiry closes above 21,707 or below 21,143, then the strategy will start making loss. Any close above 21,900 or below 20 950, then the max loss will be restricted to Rs 9,650.
DHARMESH SHAH
HEAD-TECHNICALS, ICICI SECURITIES
Where is Nifty headed this week?
We expect the index to consolidate in the broader range of 22,000-20,800 amid positive bias with stock-specific action. With the past two week’s 4.5% correction, the index is entering the budget week on a lighter note as we expect buying demand to emerge from the lower band of consolidation coincided with 50 days EMA and 38.2% retracement of the rally and head towards the psychological level of 22,000 in the coming month.
What should investors do?
Any dips should be capitalised as an incremental buying opportunity in quality stocks. In the run-up to the interim budget, we expect companies with exposure to infrastructure, capital goods, energy, PSUs, and BFSI to remain in focus. While IT provides a favourable risk-reward setup. In large-caps, we prefer Reliance, SBI, Infosys, GAIL, L&T, SAIL, Siemens, and Tata Power, while in midcaps, Coforge, MGL, Star Cement, LIC Housing Finance, Engineers India, NCC, Bank of India, Auro Pharma are looking good.
