Nifty could touch 16,900 if it sustains above 16,350

Technical and derivative analysts believe the Nifty is likely to continue its rally as long as it sustains above 16,350. They say the Nifty could head towards 16,900 if it sustains these levels. The index ended up 164.7 points, or 1%, at 16,529.10 on Friday, at a fresh record close after touching a high of 16,543.6 during the day. Analysts advise buying large-caps such as HDFC and for a 5-8% upside as midcaps are likely to continue to underperform the benchmarks.

GAURAV BISSA, VP Technical and Derivatives, LKP Securities


Where is Nifty headed after touching 16,500 last week?

Nifty finally crossed the immediate hurdle of 16,350 levels and is now comfortably trading above immediate resistance. Since Nifty is trading at life-high levels it would not be a correct approach to look for levels where the index can halt. During such times, lower time frames give us a better picture. As long as 16,350 holds, the immediate trend will remain strong. The Nifty Midcap150-Nifty50 ratio shows the underperformance of midcaps is likely to continue going ahead.

What should investors do?

One can buy Nifty futures on declines toward 16,450 for 16,600 levels with negation below 16,350. Investors and traders should look for sectors/ indexes which have given recent breakout or retest as these may see continued outperformance. Among these sectors, large-cap stocks can provide a safety cushion considering markets are trading at such high levels. Nifty Financial Services and Nifty Energy sectors look promising and among them HDFC and Reliance Industries can be bought for another 5-8% upside in the short term.

ABHILASH PAGARIA, Assistant Vice President, Edelweiss Alternative Research

Where is Nifty headed after touching 16,500 last week?

Nifty has sent out a bullish signal on the weekly quantitative indicator, but at the same time, it is also hovering in the overbought territory in the lower time frame factors. In the next few days, if we comfortably sustain above the 16,350 level then we can quickly move towards 16,900. Contrary to this, if the index slips below the said level, it can be considered as an initial sign of weakness. Considering the recent breakout, one can initiate fresh long positions on a minor weakness and look for targets till 16,900 level, keeping a stop loss below 16,350.

What should investors do?

In this truncated expiry week, one can look to initiate Nifty call ladder option strategy by buying 16,500-call and selling 16,800- call for August 18, 2021, series. In the short term, we expect the auto sector and Bajaj Finance to underperform. While for mediumterm, on the basis of stats and fundamentals, we continue to remain very bullish on , and .

NAVNEET DAGA, Senior Derivatives Analyst, YES Securities

Where is Nifty headed after touching 16,500 last week?

India remained among the best performing markets in the past one month defying weakness in the EM basket. The bull grip tightened as index heavyweights remained in short uptrend. We expect some breather for the markets as it digests the large gains made during the series with now formidable support seen near 16,200 mark in the short term.

What should investors do?

One can do a short strangle of 1:1 ratio with the expiry of August 26. One can sell Nifty 16,200-put option and sell 16,800-call with a total spread of 80-82 points. The downside breakeven would be at 16,120 and upside breakeven would be at 16,880. The maximum profit range would be between 16,200 and 16,800. The stop loss on total spread would be at 140 points. We believe near-term underperformance may persist for mid/small caps, mirroring the trend in US markets where Russell is underperforming Dow and S&P. We recommend booking