Nifty: Nifty may trade in a range, time to buy on dips – Blue Barrows

Technical analysts expect the Nifty to remain range-bound this week and advise traders to focus on stock-specific actions. , , , , L&T, Mahindra & Mahindra, , , and may show bullishness, said analysts.


Where is Nifty headed this week?
Last week, the index surpassed the previous week’s highs, but concerns over weak global cues resulted in absence of followup buying at higher zones. Now, on an immediate basis, the index has to hold above 17,550 zones for an up-move towards 17,667 and 17,777 zones, whereas supports are placed at 17,442 and 17,350 zones. On positional basis, it requires a decisive move beyond 17,777 zones to commence the next leg of the rally towards 18,000 and 18,200 zones.

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What should investors do?

India VIX spiked 7% last week and hovered near 19-20 zones, which is not giving much comfort to the bulls and it needs to hold below 18 zones for a smother market rally. Investors can continue with their existing long positions. Stock-specific action will continue. If any decline happens due to global volatility, that will provide bargain buying in the Indian market. Sector-wise we have positive stance on FMCG, defence, cement, auto, financials and selective capital goods sectors. Stock-wise positive stance in ITC, Pidilite, HAL, BEL, L&T, , TVS Motor and .


Where is Nifty headed this week?

What we witnessed in the last few days can be interpreted as a ‘time-wise correction.’ 17,200–17,000 levels have become a sacrosanct zone, and any decline should ideally be utilised as a buying opportunity. Before this, 17,400 is also to be seen as immediate support. On the higher side, 17,700–17,800 will be treated as walls. The moment we surpass this, we may see the next leg of the rally unfold to not only challenge the 18,000-mark but may even go beyond it in the coming weeks.

What should investors do?

Traders and investors are advised to focus on stockspecific actions until key indices continue with their consolidation mode. We like IndiaMART for the coming week. Stock price finally confirmed a breakout from the ‘Inverse Head & Shoulder’ pattern on the daily time frame chart. We recommend buying for a target of Rs 5,200. Traders can participate by following a strict stop loss at Rs 4,445. Also, United Spirits looked attractive in the way it behaved on Friday. We expect some catchup moves to some of its peers which did well last week. It can be bought for a target of Rs 854 with stop loss at Rs 806.


Where is Nifty headed this week?

Nifty is sustaining above all its important moving averages, which indicates positive bias. On the weekly chart, the index has formed a small bullish candle carrying a long upper shadow indicating resistance at higher levels. The index is moving in a higher-top and higher-bottom formation on weekly chart, showing positive bias. The chart pattern suggests that if Nifty crosses and sustains above the 17,750 level, it would witness buying, leading the index towards 17,950-18,200 levels. However, if the index breaks below the 17,400 level, it would witness selling, taking it towards 17,200-17,000. For the week, we expect Nifty to trade in 18,200-17,400 range with mixed bias.

What should investors do?

Stocks like M&M, TVS Motor, L&T,

, and may show bullishness. For September 8 weekly expiry, we are suggesting the Iron Butterfly strategy which involves selling of one lot of Nifty 17,550 Call at 150 and selling of one lot of Nifty 17,550 Put at 161 and simultaneously buying one lot of 17,900 Calls at 32 and buying one lot of 17,200 Puts at 48. Both risk and reward in this strategy are limited, and the gains in the strategy will be accrued between two levels —17,800 on the upside and 17,300 on the downside. A maximum profit of Rs 11,550 will happen if Nifty closes or expires at 17,550.