Nifty support at 17000, Bank Nifty to trade in 39500-37500 range this week; trading guide, technical setup

By Rajesh Palviya

On the weekly chart, Nifty 50 index formed a small bullish candle with shadows on either side indicating indecisiveness amongst participants regarding the direction. For the last four weeks, the index has been consolidating within a broad range of 17800- 17000 levels representing a short term sideways trend. The chart pattern suggests that if Nifty crosses and sustains above 17400 levels it would witness buying which would lead the index towards 17600-17800 levels. 

However if the index breaks below 17200 level it would witness selling which would take the index towards 17000-16800. For the week, we expect Nifty to trade in the range of 17600-17000 with mixed bias. The weekly strength indicator RSI is moving downwards and is quoting below its reference

Nifty Derivative Outlook 

Nifty futures closed at 17278 on a negative note with 1.37% increase in the open interest indicating Short Build Up. Nifty Futures closed at a premium of 16 points compared to the previous day discount of 10 points. FIIs were Buyers in Index Futures to the tune of 729 crores and were Sellers in Index Options to the tune of 5069 crores, Buyers in the Stock Futures to the tune of 483 crores. Net Sellers in the derivative segment to the tune of 3829 crores. India VIX index is at 22.17 v/s 22.23. Nifty ATM call option IV is currently 17.86 whereas Nifty ATM Put option IV is quoting at 25.38.

Nifty Put options OI distribution shows that 17000 has highest OI concentration followed by 17300 & 17200 which may act as support for current expiry. Nifty Call strike 17500 followed by 17600 witnessed significant OI concentration and may act as resistance for current expiry.

Bank Nifty Outlook

Bank Nifty started the week with a downward gap and traded with extreme volatility throughout the week to close on a negative note. Bank Nifty closed at 37599 with a loss of 918 points on a weekly basis. On the weekly chart, the index has formed a small Bearish candle with shadows on either side indicating indecisiveness amongst participants regarding the direction. Since the past 5-6 weeks, the index continues to consolidate in the range of 39300-36600 levels indicating a short term sideways trend. The chart pattern suggests that if Bank Nifty crosses and sustains above 38000 level it would witness buying which would lead the index towards 38500-39300 levels. 

However if index breaks below 37200 level it would witness selling which would take the index towards 37000-36400.For the week, we expect Bank Nifty to trade in the range of 39500-37500 with mixed bias. The daily and weekly strength indicator RSI is in negative terrain and are below their respective reference lines indicating negative bias.

Bank Nifty Derivative Outlook 

BankNifty Put options OI distribution shows that 37500 has highest OI concentration followed by 38000 & 37800 which may act as support for current expiry. Bank Nifty Call strike 38000 followed by 38500 witnessed significant OI concentration and may act as resistance for current expiry. 

(Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)