Nifty Outlook

•  Markets continued to gain momentum for the second consecutive week. The upside was seen mainly on the back of short-covering rally on the monthly expiry week.
• The Nifty index also completed its 61.8% retracement of the entire fall which is coming around 10562 levels and we have also seen some profit booking from the same. On the weekly scale, Nifty has formed spinning top candlestick formation which indicates indecisiveness amongst participants.
• The Nifty index respected its rising trend line connecting all the lows starting with 7511, the immediate support of this rising trend line is currently placed around 10,000 levels. Now, as long as Nifty respects its rising trend line we can expect the ongoing rally to continue.
• The major resistance is now placed at 10560 levels and if Nifty manages to sustain above the same then we can expect a continuation of a current pullback towards 10800 and above that the upside will open for 11000 marks. On the contrary, If Nifty breaks below 10,300 then it may test 10,000 levels.
  The volatility index India VIX continued to fall for the second consecutive week to end at 28.7 levels. The overall fall in the volatility is giving comfort to the bulls.
• The options data indicates that the maximum Put base is currently placed at 10,000 strikes. We have also seen significant put writing at 10,200 and 10,300 put strikes, which hints that put writers are shifting their position higher. The maximum open interest on the call side is placed at 11,000 strikes followed by 10500 strikes. The options data indicates a broader range of 10,000 to 10,500.

Nifty Weekly Chart

Bank Nifty Outlook

• As highlighted in the below weekly chart, the Banknifty index has completed its 38.2% retracement of the entire fall which is placed at 22,400 levels. We have also witnessed profit booking from higher levels due to which Banknifty index formed a Doji candlestick pattern on the weekly scale which hints of uncertainty going forward.
• On the upside, 20,400–22500 will be a crucial resistance for the Banknifty index and only a move above the same might reflect the clear strength in the market. Thus, one should remain cautious as the Banknifty has rallied significantly and in case of any long positions follow strict an SL of 20,500.
• Although momentum indicator and oscillators are very well in the buy mode and to reclaim the positive momentum it has to surpass its immediate hurdle of 22,400 levels and above that next resistance is placed at 23,000.

Bank Nifty Weekly Chart 

Author: Mr.Nilesh Ramesh Jain, Derivative and Technical Analyst (Investment Services), 27th June 2020