10,650 crucial for further upside in Nifty; midcaps to remain under pressure
The Nifty has formed a Spinning Candle with long shadows followed by a Dragon Fly Doji on the weekly scale which indicates a tough fight between the bulls and bears. However, the immediate trend is positive but follow up buying is missing at higher levels.
Now, the Nifty has to continue to hold above 10,650 levels to extend its gains towards 10,780, then 10,888 zones. On the downside, support is seen at 10,620 levels.
The Nifty remained volatile in expiry week but managed to attract buying interest from lower levels. India VIX moved up 7.36 percent in the last week, while aggregate put-call ratio starting the new series at 1.48 hints at the bullish bias of put writers.
On the option front, maximum put open interest (OI) is at 10,600, followed by 10,200 strikes. Maximum call OI is at 11,000, followed by 10,700 and 10,800 strike. We have seen put writing at 10,700, followed by 10,500 strike, while call writing is seen at 10,700 and 11,000 strike. Option data suggests a broader trading range between 10,600 to 10,900 zones for the next coming sessions.
The Bank Nifty formed a Bearish Harami pattern on daily scale as it failed to cross Thursday’s high and settled near 26,700 but the weekly candle suggests that support is intact at lower zones.
The index now has to continue to hold above 26,500 to witness an upmove towards 27,000-27,200. On declines, major support is seen near 26,250 zones. Select private and heavyweights state-run banks could continue their winning streak.
On the stock front, we expect private banks, auto and FMCG to take a lead, while midcaps would continue to remain under pressure. We have positive view on Reliance Industries, HDFC, Maruti Suzuki and Dabur India while metal and cement could continue to remain under selling pressure.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Disclaimer: The author is Associate Vice President, Analyst-Derivatives at Motilal Oswal Securities. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.