Technical analysts expect the market to extend its decline this week. The Nifty is likely to touch the 17,600 level, and in case of further weakness, the index is expected to fall below the 17,200. Traders must buy stocks such as , , and Thermax; and sell , , BoB, and , analysts said.
NAGARAJ SHETTI TECHNICAL RESEARCH ANALYST,
SECURITIES
Where is Nifty headed this week?
A bearish engulfing pattern was formed on the daily chart, and a bearish shooting star pattern is in the process as per the weekly chart. We observe a false upside breakout of significant downtrend line resistance at 17,900 levels. All this hint at a reasonable downward correction for Nifty ahead. One may expect weakness down to 17,330 (23.6% Fibonacci retracement – bottom of June at 15,183 to Friday’s high at 17,992). But, any decisive weakness below this support could open the next lower support of 38.2% retracement, which is at 16,920 levels.
What should investors do?
As Nifty reversed its uptrend from the highs, one may look to reduce long trading positions or place strict stop loss for the longs. It is advised to create short trading positions for the immediate downside target of 17,330. Sectorally, banking, healthcare, realty, metal, and automobiles will show weakness in the coming weeks. Stocks with negative bias include Canara Bank, BOB, Granules,
, , , , and . Traders can execute Nifty Bear Spread: buy Nifty 17,700 Put September 1 expiry at 158.8 and sell Nifty 17,500 Put September 1 expiry at 95.5. Net expected profit is Rs 6,835 and risk Rs3,165, breakeven at 17,636.
The recent rise in the index futures was accompanied by falling volumes, indicating a trap for the bulls. In addition, the put-call ratio for Nifty is on the higher side above the 1.30 mark. Even a bare minimum correction of 38.6% of the rally from 15,200 to 18,000 could lead to a bigger stock crack. Thus, the prudent strategy will be avoid fresh longs in index and book profits in trading bets. On the downside, 17,700 – 17,350 might be the following week’s range. Traders or investors should wait for a considerable correction in the market to deploy longs.
What should investors do?
Even the Nifty Bank index gave away all its weekly gain in just one trading session to sneak below the 39,000 mark. The Nifty Bank index turned exactly from there; hence we are of the opinion that we might witness bearish implications of the pattern in the coming week. In that case, we might see a corrective move toward 37,000-36,000. The view would be negated above the 40,000 mark on a closing basis. We recommend selling ICICI Bank for a target of Rs 835 with a stop loss of Rs 895. Buy
with a stop loss of Rs 2,150 for a target of Rs 2,450.
VIKAS JAIN SENIOR TECHNICAL AND DERIVATIVE ANALYST,
SECURITIES
Where is Nifty headed this week?
Nifty closed flat at to positive by 0.3% w-o-w at 17,758 and has closed in a doji candle near the top end of the range. The index has multiple resistance in the range of 18,000- 18,100 levels, and has the highest call open interest (OI) at 18,000 in August expiry, and it also coincides with the high it tested in the first week of April 2022. The daily RSI has reversed from the higher range, and Nifty 50 has closed at the immediate short-term 8 days average of 17,735, which has been holding since the start of the August expiry.
What should investors do?
We expect corrective action and volatility to continue to test the 17,600 level initially and the 17,200 level as the band of short-term averages. A stable move above 18,200 levels could lead the index towards scaling a new all-time high at 18,600 levels. Among sectors, we believe the IT could outperform while banks could see corrective action, followed by the realty and auto sectors. Among stocks, we like Infosys and HCL Tech on the long side, while
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