By Rajesh Palviya

Nifty started the previous week on a flat note and the buying momentum throughout the week helped it close on a strong note. NSE Nifty 50 closed at 17670 with a gain of 517 points on a weekly basis. Nifty is trading above all its important moving averages indicating positive bias ahead. On the weekly chart the index has formed a sizable bullish candle and closed above previous week’s high indicating positive bias

Nifty 50 Derivative Outlook

The Nifty rollover stood at 82.12% on Thursday compared to 77.22% on the same day of previous expiry. The Market wide March rollover stood at 88.35% on Thursday as compared to 88.99% on the same day of previous expiry. Nifty started April expiry with total OI of 152.93 lakh shares adding 36.25 lakh shares. The Nifty rollover is higher than its three months average of 76.92% and higher than its six months average of 78.44% as of Friday. The market wide rollover is lower than its three months average of 90.35% and lower than its six months average of 91.55%.

Nifty futures closed at 17713 on a positive note with 2.97% decrease in the open interest indicating Short Covering. Nifty futures closed at a discount of 37 points compared to the previous day premium of 13 points. India VIX index is at 18.43 v/s 20.56. Nifty ATM call option IV is currently 17.18 whereas Nifty ATM Put option IV is quoting at 16.49. Index options PCR is at 1.30 v/s 1.07 & F&O Total PCR is at 0.91. Nifty Put options OI distribution shows that 17500 has highest OI concentration followed by 17400 & 17300 which may act as support for current expiry. Nifty Call strike 17500 followed by 18000 witnessed significant OI concentration and may act as resistance for current expiry.

Bank Nifty Outlook

Bank Nifty started the previous week on a flat note and buying momentum throughout the week led it close on a strong note. Bank Nifty closed at 37149 with a gain of 1738 points on a weekly basis.On the weekly chart the index has formed a sizable bullish candle and closed above previous week’s high indicating positive bias. The chart pattern suggests that if Bank Nifty crosses and sustains above 37200 levels it would witness buying which would lead the index towards 37800-38300 levels. However if the index breaks below 36800 level it would witness selling which would take the index towards 36500-36000. Bank Nifty is trading above 50, 100 and 200 day SMAs, indicating positive bias in the short to medium term. For the week, we expect Bank Nifty to trade in the range of 38000-36200 with positive bias.The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias.

Bank Nifty Derivative Outlook

Bank Nifty March rollover stood at 91.46% on Thursday as compared to 76.23% on the same day of previous expiry which is higher than its three months average of 81.76% and higher than its six months average of 82.15%. Bank Nifty started April expiry with total OI of 57.85 lakh shares adding 35.83 lakh shares.

Bank Nifty closed at 37202 on positive note with 22.68% decrease in open interest indicating Short Covering. Bank Nifty Futures closed at a discount of 127 points compared to the previous day premium of 62 points. Bank Nifty Put options OI distribution shows that 36000 has highest OI concentration followed by 36500 & 36300 which may act as support for current expiry. Bank Nifty Call strike 36500 followed by 36000 witnessed significant OI concentration and may act as resistance for current expiry.

Sectors and stocks to watch this week

We expect Bank Nifty, Financial, Sugar, Capital goods, Metal, Real Estate and Automobile stocks to show good strength this week . One can look at stocks like State Bank of India (SBI), Housing Development Finance Corporation (HDFC), Shriram Transport Finance, SAIL, NMDC, L&T, DLF, Bajaj Auto, and Mahindra & Mahindra (M&M).

(Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)

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