Is Nifty set for a breakout? Analysts see signs of a shift ahead
Nifty hovered near 24,175, needing to clear 24,200 to regain strength. Analysts suggest bullish option spreads for rebounds and caution against a 23,900 break. HEG and Laurus Labs are recommended buys with specific targets and stop losses. Glenmar...
By ET Bureau |
Agencies
Nifty hovered in a broad 23,800–24,700 band last week before closing at 24,175.65. Analysts say the index must clear the 24,200–24,400 zone to regain strength. Strategies vary: some recommend bullish option spreads to capture rebounds, while a cautious camp warns of further downside if 23,900 breaks.
The recommended Nifty Options strategy for the weekly September 1 expiry is a Bull Call Spread, suitable for support-based buying. Traders are advised to buy one lot of the 24,200 strike Call Option and simultaneously sell one lot of the 24,400 strike Call Option. The maximum risk in this strategy is 75 points (Rs 4,875).
The stock has retested its earlier breakout zone near Rs 700 and bounced strongly, confirming that the breakout zone is acting as support. It has maintained its broader uptrend, with dips being bought into. A pole-and-flag break out above Rs 750 could trigger the next leg of the upmove.
The stock is in a strong uptrend, trading at all-time highs and outperforming the broader market. It has formed higher highs, reflecting buyer strength, and has respected its 20 DEMA, bouncing from that level.
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NILESH JAIN, HEAD – EQUITY TECHNICAL AND DERIVATIVE RESEARCH, CENTRUM FINVERSE
Trading Strategy:
The Nifty has a crucial support at 24,000. As long as the index sustains above this level, a rebound towards 24,300 remains possible. With expectations of a near-term pullback, a Bull Call Spread is recommended for the upcoming weekly expiry: Buy 1 lot of 24,200 Call @ Rs 97 Sell 1 lot of 24,300 Call @ Rs 51 This results in a net debit of 46 points, with maximum loss capped at Rs 2,990. The strategy offers a maximum profit potential of 54 points per lot (Rs 3,510), with breakeven at 24,246.
The stock has formed a strong base and moved higher, clearing the 21 DMA and 50-DMA hurdles near Rs 294. It continues to trade above short- and long-term averages.
RUPAK DE, SENIOR TECHNICAL ANALYST, LKP SECURITIES
Trading Strategy:
As long as the index remains below 24,200, sentiment is likely to stay weak, with a possible decline towards 23,900 in the near term. A fall below 23,900 could trig ger further correction. Conversely, a decisive move above 24,200 may improve sentiment and strengthen the near-term trend. Selling Nifty September Futures below 24,315 for a target of 24,200, while maintaining a stop-loss at 24,376, is recommended.
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