A cross above 18,550 could take Nifty to 18,700-18,800

Benchmark Nifty may continue its uptrend this week, say technical analysts. If the index crosses above 18,550, it could move up to 18,700-18,800 levels on shortcovering. However, if the index slips below 18,250, profit booking up to 18,050-17,900 could be witnessed. Stocks such as DLF, M&M, SBI, ICICI Bank, Bata India, Dabur, TCS, ITC, Axis Bank, Maruti, TVS Motors, Reliance, and Canara Bank show strength on the charts.

RAJESH PALVIYA
HEAD TECHNICAL DERIVATIVES, AXIS SECURITIES

Where is Nifty headed this week?
On weekly chart, the index has formed a long bullish candle forming a higher high-low than the previous week and has closed above the previous week’s high, indicating positive bias. The index is moving in a higher top and higher bottom formation on the daily chart, indicating positive bias. Chart pattern suggests if Nifty crosses and sustains above 18,550 levels, it would witness short covering towards 18,700-18,800 levels. However, if it breaks below the 18,350 level, it would witness selling towards 18,200-18,100. Nifty remains in an uptrend in the medium term, so buying on dips is our preferred strategy. For the week, we expect Nifty to trade in the range of 18,200-18,750 with a positive bias.

What should investors do?
Stocks like DLF, M&M, SBI, ICICI Bank, Aurobindo Pharma, Divi’s Lab, Bata India, Dabur, and TCS will likely show strength soon. We suggest a market-neutral strategy called Iron Butterfly for the 8 June expiry. Sell one lot of Nifty 18,500 Call at Rs 148 and Put at Rs 128, and simultaneously buy one lot of 18,850 Call at Rs 24 and one lot of 18,150 Put at Rs 38. A maximum profit of Rs 10,700 will happen if Nifty closes at 18,500. If Nifty on expiry close above 18,850 or below 18,150, then the maximum loss will be restricted to Rs 6,800.

DHARMESH SHAH
HEAD OF TECHNICALS, ICICI SECURITIES

Where is Nifty headed this week?
Weekly price action formed a bull candle with a higher high-low indicating a continuation of an up-move after a couple of weeks of consolidation. We expect Nifty to head towards life highs of 18,887 over the next few weeks with elevated support at 18,100 levels. Meanwhile, the Nifty Midcap100 index has given a breakout from the 18-month consolidation phase and is expected to outperform over the next few quarters relatively. The market breadth has significantly improved, supported by across the sector participation, as currently, 62% of the stocks are trading above the 200-day moving average compared to the April reading of 48%. FIIs continued their buying spree in May despite the dollar index increasing by 3%. We expect the dollar index to face a strong hurdle at 105 in the coming weeks.

What should investors do?
Investors should focus on the larger picture and construct a quality portfolio to ride the larger moves in the coming quarters. We expect stocks from BFSI, IT, auto ancillary, capital goods, and discretionary to lead the outperformance. We prefer Reliance, SBI, TCS, Maruti Suzuki, United Spirits, Titan, and DLF in large-cap space; while in midcaps, we like Coforge, IDFC First Bank, L&T Finance, Gabriel India, Syngene, KEC, Siyaram Silk Mills and PI Industries.

SUDEEP SHAH
HEAD - TECHNICAL & DERIVATIVE RESEARCH, SBI SECURITIES

Where is Nifty headed this week?
Chart patterns suggest the zone of 18,250-18,300 will be strong support going forward. Until the index sustains above the level of 18.250, we may witness a continuation of this rally up to 18,750- 18,800. However, if the index slips below 18,250, profit booking up to 18,050-17,900 could be witnessed. Options data suggest a broader trading range of 18,200-18,750 for this week.

What should investors do?
Buy the dips until 18,200 levels are not breached on the downside on the Nifty. Accumulate quality midand large-cap stocks. Traders should focus on stocks and sectors outperforming the Nifty. Based on the rollover analysis and chart set-up, we expect stocks from the auto, FMCG, oil & gas, banking, and realty sectors to outperform going ahead. Positive trade set-up is visible in select large-cap names such as ITC, Axis Bank, ICICI Bank, Maruti, TVS Motors, Titan, Reliance, and DLF; while on the mid-cap front, stocks like Canara Bank, BEL, Polycab, L&T Fin, Trent, Apollo Tyres and United Spirits could continue to witness strong buying interest.