Remain light as this bounce could be sold again

CHANDAN TAPARIA

DERIVATIVES & TECHNICAL ANALYST, MOTILAL OSWAL FIN SERVICES

Where Are We?

The Nifty ended last week with the loss of around a percent but formed a bullish body candle on weekly scale as it trimmed most of its intra-week losses. Nifty futures witnessed rollover of 62.12 per cent, which is lower than its last month average of 77.65 per cent, indicating bearish bets and lighter positions.


What is in Store?

Options data indicate an immediate hurdle at 9,000-9,200 zones. The overall chart structure is still negative but a pull-back move may be seen which could be sold again. The Nifty needs to hold 8,300 zones to witness a bounce towards key resistance of the 9,000-9,200 zone, while a negative global sentiment and breaking of support zones could take it to 7,700 and 7,500 zones.

What Could Investors Do?

Remain light as this bounce could be sold again. Option traders can initiate Bear Put Spread in Nifty (+8600 PE, -8300 PE) to hedge the position or to gain from the negative to range-bound bias. Most of the counters witnessed bounce from their deep oversold territories but major set up is still negative. Stocks like HUL, Colgate-Palmolive, Berger Paints, ICICI Bank, ITC, TCS could be bought on any correction to add as positional bets while weakness could continue in metal, PSU banks and auto counters.