Nifty on course to all-time high, buy on dips to ride the rebound

Following last week’s gain of 2.5% in the Nifty, technical and derivative analysts expect the index to head towards 18,400- 18,500 in the coming days. The index is likely to find support around 17,900 followed by 17,700. Stocks of state-owned companies, metals and real estate companies are likely to outperform in the coming days, said analysts. On Friday, Nifty and the Sensex ended flat at 18,255.75 and 61,223.03, respectively.

ROHIT SRIVASTAVA
FOUNDER, INDIACHARTS.COM

Where is the Nifty headed in the coming week?
Nifty has been extending higher for four weeks and may continue this trend into the budget at the end of the month. We could touch 18,600 soon given the momentum in the market. The market advance should remain broad-based with participation from multiple sectors.


What should investors do?
The strategy should be to stay bullish on all declines. Sector preference would veer toward metals as commodity prices start to rise again. Sugar stocks should also be on focus ahead of the budget. Lastly, stocks of public sector enterprises are making a comeback and could continue to assist this rally.

GAURAV BISSA
VP - DERIVATIVES AND TECHNICALS, LKP SECURITIES

Where is the Nifty headed in the coming week?
Nifty continued to hold its gains and ended last week on a strong note. The overall structure doesn’t look too weak at this point and after a brief consolidation, the Nifty is expected to continue its upward trajectory. Comfortable writing in weekly and monthly 18,000 strike puts and incremental open interest addition in 18,100 puts support this postulate. As long as 18,000 is held, the Nifty can test 18,400-18,450 levels in the coming days.

What should investors do?
Traders are advised to wait for an up move above 18,310 in the Nifty futures to create fresh long positions with a negation level of 18,180 and a price objective of 18,450. Nifty futures is witnessing some consolidation on hourly charts and it is prudent to wait for the Nifty to come out of this range to have a higher probability of an upside. Among stocks, investors can focus on realty stocks like Sobha and Sunteck and some of the midcaps like HFCL and Praj Industries for an 8-10% gain.

RAHUL SHARMA
DIRECTOR & HEAD- TECHNICAL DERIVATIVES RESEARCH, JM FINANCIAL SERVICES

Where is the Nifty headed in the coming week?
Global cues have been subdued in the last two weeks especially from the US but the Nifty has managed to outperform the entire space regardless of Omicron, Fed tapering and other challenges. The DXY (Dollar index) has bounced from its support level of 94.5. Nifty PCR OI (put-call ratio open interest) stands at 1.25 with meaningful bets seen at the 18,200 straddles of the weekly expiry. Both Nifty and Bank Nifty futures have seen short covering in the previous week. Foreign investors have continued to sell in cash for the third consecutive day and despite that the Nifty has managed to cross 18,250. There is some bearish divergence on the hourly charts of Nifty but the daily RSI (relative strength index) is suggesting that an up move should continue. One can expect a new all-time high in the Nifty before the budget with support placed at 17,950 and 17,700.

What should investors do?
Nifty remains a buy-on-dip and traders are advised to look for buying opportunities around 18,000 for upside targets of 18,340 and 18,605. The 17,700 level should act as the base from here and we should remain in an uptrend as long as this level is not breached. One can look to add Nifty Calls of 18,500 strike price of 27 January expiry (Rs 91) on dips for an expiry target of Rs 200- 250. The Nifty Smallcap index has taken off and hit new life highs ahead of the Nifty indicating the risk appetite is back amongst retail and high net-worth traders. Sectorally, we are bullish on public sector enterprises, realty and metals. Our top picks are Tata Power, Godrej Properties and JSW Steel for an upside potential of 15-20% and closing stop-loss of 7.5% from current levels.