Nifty’s path to be clearer on close above 18K: Analysts

Technical analysts said a closing above 18,000 will be crucial for the Nifty to find direction in the coming days. If it stays above 18,000, the index could rise to 18,200 levels. Nifty ended up 104.85 points or 0.6% at 17,895.20 on Friday, closing the week with a 2% gain. Analysts expect the Nifty to find support in the 17,500-17,600 range. Technical and derivatives analysts advise buying stocks in autos, state-owned banks, pipe makers and hotels.

GAURAV BISSA
VP-DERIVATIVES AND TECHNICALS, LKP SECURITIES

Where is the Nifty headed?
Nifty has been forming higher highs-higher lows on hourly charts suggesting the uptrend is intact. However, the previous swing highs around 17,950 levels are likely to act as an immediate hurdle. This coincides with the fact that the 18,000 strike call option has the highest open interest concentration in both weekly and monthly series. A close above this can push Nifty toward 18,250-18,350 levels.

What should investors do?
Traders should be cautious about buying Nifty at current levels as the index is trading near-immediate resistance levels. The ideal strategy would be to buy the index once it closes above 18,000 levels. One can also buy the 18,200 call option once these criteria are met. Investors and positional traders should stick with sectors that have given fresh breakouts like Nifty PSU, which can provide interesting opportunities. They should avoid sectors that have already run up a lot, as a small consolidation or dip in Nifty can make them quite unfavourable. Stocks like Kamat Hotels and Prince Pipes can witness 8-10% upside in the coming days and are looking very lucrative at current levels.

CHANDAN TAPARIA
DERIVATIVE ANALYST, MOTILAL OSWAL

Where is the Nifty headed?
Nifty has been making higher lows for the last 10 consecutive weeks and supports are gradually shifting higher. It has gained by around 2,400 points in this rally from a swing low of 15,513 to a lifetime high of 17,947 levels. However, it has been witnessing a positive to range-bound bias from the last five weeks but the good part is that every small decline is being bought and the index is absorbing all the supply near its lifetime high of 17,947 zones. Options data suggests a trading range between 17,400 and 18,200 zones and an immediate range between 17,600 and 18,000 zones.

What should investors do?
Until the Nifty holds above 17,777 zones, use any small decline as a buying opportunity for the next leg of rally towards 18,000 and 18,200 zones. Traders can initiate a Nifty Bull Call Spread in weekly expiry by buying 17,950 Call and selling 18,100 Call with the view to a fresh market momentum beyond 18,000 zones. Investors are also advised to use small declines as a buying opportunity. We may see positive momentum in the IT, PSU banks, chemicals, hotels, travel and open-up theme related stocks. Bullish views are seen in India Mart, IEX, HCL Tech, Mind Tree, Naukri, Tata Motors, Dixon, Apollo Tyre, Bharat Forge, Bank of Baroda etc. Most of them are likely to gain 5-8% in next few sessions.

SIDDARTH BHAMRE
DIRECTOR-ALTERNATIVE INVESTMENTS AND RESEARCH AT INCRED EQUITIES

Where is the Nifty headed?
In the past two days, gap-up openings have not seen any follow up buying during the day. 17,900-18,000 has acted as a resistance zone for the time being. Commodities are leading this up-move and equity is following suit. Support of 17,600 has now gained more prominence. Though this is the highest level for Nifty on a closing basis, it has not added strength to the charts.

What should investors do?
We would suggest traders stay light and increase exposure when clarity emerges. For Nifty we would wait and watch for it to breach the 400-point range it is into and adopt a stock-specific approach until then. The Nifty Auto index has given a breakout confirmation and components like Tata Motors, M&M, Maruti have shown strength. We would suggest adopting a conservative approach of buying on dips in these names and other midcap stocks in the space.