Crime Today News
Nifty 50 (23,519) and Nifty Bank (51,565) posted a weekly gain for the second time in a row as they appreciated 0.7 per cent and 1.9 per cent respectively. The derivatives data present a positive outlook for both indices.
Nifty 50
The April Nifty futures (23,638) began last week on the front foot and rose to hit a high of 24,035 on Tuesday. However, for the rest of the week, it largely remained subdued and saw some moderation.
Yet, on a weekly basis, Nifty futures (April) posted a gain of 0.5 per cent along with an increase in the Open Interest (OI). The outstanding OI of this contract went up by a little over four times to 125.6 lakh contracts over the past week, denoting a long-build-up.
While the Put Call Ratio (PCR) of the weekly options is at about 0.80, a bearish sign (because of relatively higher call option selling), the ratio for April monthly contracts is now at 1.25, a positive (due to relatively higher put option selling). So, although there might be temporary weakness, Nifty futures retain a positive outlook.
The chart too gives a bullish inclination despite the contract softening in the second half of last week. As long as Nifty futures (April) stays above 23,500, the probability of a rally from the current level is high.
But in case the contract slips below 23,500, it might extend the decline to 23,150 before establishing the next leg of uptrend.
A fresh rally, either from the current level of 23,638 or after a moderation of 23,150, can take Nifty futures (April) to 25,000.
In case the support at 23,150 is breached, the contract can fall to 22,800. A breach of this will turn the outlook bearish. However, as it stands, the bulls are in control even though they might lose some traction temporarily.
Strategy: We recommended buying Nifty futures (April) if it breaks out of 23,700, which it did early last week. Retain this trade with a stop-loss at 23,400. When the contract rises to 24,200, revise the stop-loss to 23,700. Book profits at 25,000.
Alternatively, for lesser risk and margin obligation, we suggested buying 23200-call (April) (₹572) when Nifty futures rallied past 23,700. The approximate purchase price would be ₹700. Hold this position. But place a stop-loss at ₹250. Target can be ₹1,800.
Nifty Bank
The April Nifty Bank futures (51,841) outperformed Nifty futures last week by gaining 1.8 per cent. Along with this up move, the OI of April futures increased nearly 2.5 times to 26.9 lakh contracts, indicating a long build-up.
Supporting the positive view, the contract broke out of a key resistance at 51,300. After registering an intra-week high of 52,350, the contract ended the week lower at 51,841. Nevertheless, the contract has not shed the upward bias it built over the past two weeks.
That said, there might be a correction, probably back to retest the resistance-turned-support of 51,300. If there is an extension in downswing, it can drop to 51,000. However, we expect Nifty Bank futures (April) to eventually resume the uptrend, get past 52,350 and touch 54,000 in the short term.
But note that a breach of 51,000 can result in the contract falling deeper, probably to 49,800-50,000 support band.
Strategy: Retain the long position on Nifty Bank futures (April) initiated post the breakout of 51,300. Maintain the stop-loss at 50,750. However, as the chart shows good potential, the target can be revised higher to 54,000. When the contract reaches 53,200, modify the stop-loss to 51,500.
Traders who bought 50,200-call (April) (₹1,865) following the Nifty Bank futures breaking out of 51,300 (approximate purchase price is ₹1,800), can hold the position. Target and stop-loss can be ₹3,900 and ₹800 respectively.
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