By Rajesh Palviya

Nifty started the week on a flat note and remained lackluster within a narrow trading range throughout the week. Nifty closed at 18308 with a loss of 42 points on a weekly basis. On the weekly chart, the index has formed a small bearish candle carrying shadows on either side representing extreme volatility. The chart pattern suggests that if Nifty crosses and sustains above 18500 level it would witness buying which would lead the index towards 18600-18800 levels. However, if the index breaks below 18200 level it would witness selling which would take the index towards 18000-17700.

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Bank Nifty Outlook

Bank Nifty started the week on a flat note and remained in a narrow range throughout the week, indicating lack of strength on either side. Bank Nifty closed at 42437 with a gain of 300 points on a weekly basis. On the weekly chart, the index has formed a small Bullish candle forming a higher High-low compared to the previous week, and has closed above previous week’s high indicating positive bias. The chart pattern suggests that if Bank Nifty crosses and sustains above 42600 level, it would witness buying which would lead the index towards 42800-43000 levels.

However, if the index breaks below 42200 level, it would witness selling which would take the index towards 42000-41700. For the week, we expect Bank Nifty to trade in the range of 43000-41700 with mixed bias. The daily and weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating positive bias.

Sectors and Stocks to watch

We expect Banking, Capital Goods, Cements, Midcap IT, and Auto Ancillary sectors to show bullish bias. One can focus on stocks like SBI, Canara Bank, Union Bank, L&T, Voltamp Transformer, Ambuja Cement, JK Cement, LTTS, Coforge, Apollo Tyre, JK Tyre, Jindal Steel, JSW Steel are likely to show bullishness in the coming trading sessions.

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Nifty Strategy for this week

The strategy which we are suggesting for the week with expiry schedule on 24 November 2022 is IRON BUTTERFLY, which involves Selling of one lot of Nifty 18,350Call at Rs 105 & Selling of one lot of Nifty 18,350 Put at Rs 100 and simultaneously buying one lot of 18,650 Call at Rs 12 & buying one lot of 18,050 put at Rs 21. Both risk and reward in this strategy are limited and the gains in the strategy will be accrued between two levels i.e 18,525 on upside & 18,175 on downside. Maximum profit of Rs 8,600 will happen if Nifty closes/expires at 18,350. On the other hand if Nifty on expiry closes above 18,522 (upper bep) or below 18,178 (lower bep), then strategy will start making loss. While for any close above 18,650 or below 18,050, the max loss will be restricted to Rs 6,400.

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