Nifty started the previous week on a flat note and traded with extreme volatility on either side throughout the week. NSE Nifty 50 closed at 17110 with a loss of 69 points on a weekly basis. On the weekly chart the index has formed a “Doji” candlestick formation indicating indecisiveness amongst market participants regarding the direction. The  chart pattern suggests that if Nifty 50 crosses and sustains above 17500 level it would witness buying which would lead the index towards 17800-18000 levels. However, if the index breaks below 17000 level it would witness selling which would take the index towards 16800-16500 .For the week, we expect Nifty to trade in the range of 17500-16500 with mixed bias. The daily and weekly strength indicator RSI is moving downwards and is quoting below its reference line indicating negative bias. 

Nifty futures closed at 17135 on a negative note with 3.47% increase in the open interest indicating Short Build Up. Nifty Futures closed at a premium of 33 points compared to the previous day premium of 15 points. FIIs were buyers in Index Futures to the tune of 441 crore and were buyers in Index Options to the tune of 11271 crore, sellers in the Stock Futures to the tune of 358 crore. Net buyers in the derivative segment to the tune of 11050 crore. India VIX index is at 19.42 v/s 19.37. Nifty ATM call option IV is currently 15.19 whereas Nifty ATM Put option IV is quoting at 18.89. Index options PCR is at 0.9 v/s 1.36 & F&O Total PCR is at 0.84. 

Nifty Put options OI distribution shows that 17000 has highest OI concentration followed by 16900 & 17200 which may act as support for current expiry. Nifty Call strike 17300 followed by 17500 witnessed significant OI concentration and may act as resistance for current expiry.

Bank Nifty Outlook

Bank Nifty started the previous week with a downward gap and selling pressure throughout the week led the index to end on a positive note. Bank Nifty closed at 36064 with a gain of 43 points on a weekly basis. On the weekly chart the index has formed a bullish candle forming lower high-low as compared to previous week and has closed below the same indicating weakness. The chart pattern suggests that if Bank Nifty crosses and sustains above 36500 levels it would witness buying which would lead the index towards 37000-37500 levels .However if the index breaks below 35900 level it would witness selling which would take the index towards 35500-35000. Bank Nifty is trading below 20, 50, 100 and 200 day SMA which are important short term moving averages, indicating negative bias in the short to medium term. For the week, we expect Bank Nifty to trade in the range of 37000-35000 with a negative bias.

Bank Nifty Derivative Outlook

Bank Nifty closed at 36144 on positive note with 3.79% increase in open interest indicating Short Build Up. Bank Nifty Futures closed at a premium of 56 points compared to the previous day premium of 41 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 Cement, Chemical & Fertilisers, Oil & Gas, Auto and FMCG sectors may show some buying interest while IT, Banking, Capital goods sector may show some weakness. We believe stocks specific activity is going to continue in the market and Midcap stocks may likely to perform this week. Stocks like Reliance Industries (RIL), Hindustan Unilever Ltd (HUL), Ambuja Cements, Coromandel International, Indian Hotels, Deepak Nitrites, Hero MotorCorp, Aditya Birla Fashion and Retail (ABFRL), and Asian Paints are likely to perform in this week.