Nifty could face further selling this week: Analysts

RAJESH PALVIYA
HEAD TECHNICAL DERIVATIVES, AXIS SECURITIES

Where is Nifty headed?
On weekly chart, the index has formed a doji, indicating indecisiveness on the direction. Nifty slipped below its 50- and 100-day simple moving averages, which indicates it may correct further. If Nifty crosses and sustains above 18,100, it would witness buying, leading towards 18,300-18,500. However, if the index breaks below 17,700, it would witness selling which would take the index towards 17,500-17,300.

What should investors do?
One can focus on L&T, ABB, Cummins India, ONGC, Oil India, UltraTech, JK Cement, Tech Mahindra, and Mphasis. Traders can initiate a moderately bullish strategy with reduced premium outflow and a lower breakeven point — Bull Call Spread of March 2 expiry to buy one lot of 18,000 Call at Rs 137 and simultaneously sell one lot of 18,300 Call at Rs 35, with possible maximum loss of Rs 5,100. If Nifty, on expiry, closes above the breakeven point of 18,102, the strategy will start making profits. Maximum gains will be restricted to Rs 9,900 as the gains of a long 18,000 Call will be offset by the sold 18,300 Call if Nifty closes above 18,300 on expiry.

SAMEET CHAVAN
CHIEF ANALYST-TECHNICAL & DERIVATIVES, ANGEL ONE

Where is Nifty headed?
Lack of follow-up buying nullified the breakout attempt. However, the recent price action could be seen as constructive development for our markets as the index is hovering above the sloping trend line and has also attempted to transcend the sturdy hurdle of 18,000 after two weeks of consolidation. As far as levels are concerned, we remain hopeful till the support of 17,800-17,700 is firmly withheld. On the flip side, sustenance above 18,000 could only bring the cheer back in the market, while on the higher end, 18,200 is likely to be the sturdy wall. What should investors do?
UltraTech has seen good traction on Friday to confirm a breakout from the ‘Bullish Flag’ pattern on daily chart and huge volumes. We recommend buying for a trading target of Rs 7,400 with stop loss at Rs 7,170. On Friday, the consolidation range finally broke on the lower side for Manappuram, resuming its higher degree downtrend. Traders can short for a short-term target of Rs 105.5 with strict stop at Rs 111.2.

VIRAJ VYAS
TECHNICAL & DERIVATIVES ANALYST, ASHIKA STOCK BROKING

Where is Nifty headed?
Nifty is standing at the strong polarity support, failing to hold which the index is likely to see further price correction towards 17,000-17,200. The index is attempting to break out of the lower high and lower low formation, and only a sustained close above 18,200-18,250 is likely to trigger bullish momentum for fresh life highs. But spending more time below the resistance zone will likely add further weakness. Even on the weekly scale, the index has formed an indecisive bar as it continues to oscillate in the 18,200-17,800 zone, and only a breakout of this range can give directional bias. We are underperforming our global peers, and any incremental weakness abroad can impact our domestic markets.

What should investors do?
Larger degree charts indicate strength, and any dip towards 17,000-17,200 should be bought into. Stocks that exhibit strength include Cholamandalam Investments, Cyient, Dalmia Bharat, Elgi Equipments, Godrej Consumer, and UltraTech Cements, while Stocks such as Angel One, Concor, HDFC AMC, Hero Motocorp, Laurus Labs, Patanjali, and Punjab National Bank show weakness.