Strong resistance for Nifty at 22,800; Vix rise a worry

Where is Nifty headed this week?
We expect the Nifty to consolidate in the range of 22,700 – 22,300. The ideal strategy would be to look for signs of weakness and sell on rise around the resistance zone of 22,620 – 22,640 with a stop loss of 22,720 for the target of 22,280. Options data suggests aggressive call writing at 22,800 while unwinding was seen in 22,700 Puts, which have probably shifted to 22,500 strike which suggests the support base shifts lower and 22,800 shall be difficult to surpass this week. On the downside, the crucial support zone is placed at 22,300-22,280, which coincides with the 40-day exponential moving average and the 50% Fibonacci retracement level of the rise from 21,777 to 22,795.

What should do?
Investors need to lighten their long bets and move to cash, as correction may provide a better entry point soon. We expect the correction to continue in IT, media and FMCG stocks. Overbought conditions may result in profit booking in metal and defence stocks. CPSE and pharma stocks are likely to witness relative outperformance. Buy Coal India at Rs 474 with a stop loss of Rs 460 for a target of Rs 496 – 515. Sell Apollo Hospitals May futures at Rs 6,035 with a stop loss of Rs 6,150 for a target of Rs 5,900–5,800. Sell Jindal Steel May futures at Rs 939 with a stop loss of Rs 955 for the target of Rs 878 – 855.

SACCHITANAND UTTEKAR
VP- TECHNICAL & DERIVATIVES RESEARCH, TRADEBULLS SECURITIES

Where is the Nifty headed this week?
A confident closing below 22,380 early in the week is the immediate prerequisite for an additional decline towards 22,000 (the lower end of the Rising Channel pattern). A sustained increase over 22,640 might encourage a hopeful rebound back towards 22,900–23,040, which is still a crucial supply zone for the present upswing. Falling option premiums without any help from subdued price movements could be the first sign of stability and confirmation of stable support.

What should investors do?
Traders are advised to remain selective while deploying either side trades until the index continues its movement within the 23,000-22,000 ‘Rising Channel Pattern’. Leverage positions could be avoided until clarity emerges on a daily scale. Investors could utilise the dips, if any, towards 22,000 to accumulate value stocks, as there could be a sector rotational move towards IT & FMCG stocks. Top picks are Infosys, TCS, HCLTech, Naukri, HUL, Dabur, and Marico.

AJIT MISHRA
SVP-RESEARCH, RELIGARE BROKING

Where is Nifty headed this week?
Pressure persists around the record-high levels for Nifty, with a close below 22,400 potentially leading to further declines towards 22,200-21,850. The sharp increase in the volatility index, India VIX, suggests caution. Resistance is expected around 22,750-22,900. While most sectors are contributing positively, except for IT, banking performance is likely to influence sentiment heavily.

What should investors do?
On the index front, participants may consider adding Nifty Puts as a hedge to the existing longs. Also, we feel it is prudent to stay stock-specific and maintain positions on both sides, given the prevailing choppiness. Traders may consider Biocon, BPCL, Coal India, Godrej Consumers, Sun TV for longs; and Bandhan Bank, Bata India, Kotak Bank, and PVR Inox for shorts.