Weekly Report on the Market by Mr. Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities

NIFTY Outlook

Nifty rallied in the truncated week by 223.15 or 2.95% points closing near 7800 mark while Sensex captured 26,000 levels closing at 26,103.23. A healthy rally and consolidation was witnessed in the week. Banking supported the rally on last trading of the week registering gains of 2.2% for the week, underperforming the benchmark index Nifty. Geopolitical tensions eased as US performed strikes on Iraqi ISIS group, tensions in Russia and Ukraine eased. Also, Israel and Palestine held talks in Cairo. Global markets rallied supporting the equity markets. Domestic data of CPI and IIP disappointed. CPI came at 7.96% and IIP at 3.4%, while WPI data at 5.19% showed easing at wholesale levels. Rupee also showed strength breaking 61 levels and near 60.80 levels as rally in US dollar took a pause. For next week, markets are expected to show more upside. Nifty is expected to touch a new life time high. The upside however is seen limited and major resistance faced at 7850-7900 levels. FnO data suggests a strong resistance in this range. PSB participant is necessary for Nifty to move higher further, thus PSBs are expected to drive the markets higher. IT stocks may face slight profit booking and can trade with flat to positive bias. Global tensions and Fed minutes on 20th will drive the currency which will impact equity markets.

NIFTY - Technical Outlook

Major technical indicators are suggesting Nify to touch a new all time high next week. Directional strength on upside is showing momentum along with this Nifty is looking to be coming out of oversold zones on daily charts. Double top formation can be observed on dailty charts, Any suatainable break above 7820 may trigger a rally into Nifty and take to 7900 levels. For the up move major resistance is seen at 7852 while on the down side 7650 is a strong support for the week.

CNX IT – Outlook

CNX IT looks slightly in a overbought zone technically, while directional strength for uptrend is also flat. Major technical indicator is suggesting slight technical correction which may come in form of profit booking after recent run up. CNX IT may face a strong resistance at 10,600 levels while immediate support is seen at 10,300 for the week.

Bank Nifty – Outlook

Weekly support for Bank Nifty is at 14453.81 which is median of Bollinger banks. Major indicators show upside on Bank Nifty. After recent choppiness, Bank Nifty reclaimed 15,000 levels in the truncated week closing above its 5 MEA of 15043. Further upside could be expected in Banks next week with a resistance at 15350.

Nifty Strategy for Next week:

 Buy Nifty 7800 Call option at Rs.66.4 (CMP)

 Buy Nifty 7800 Put option at Rs. 66.9 (CMP)

Ratio for Calls: Puts (quantity) at 2:1 A strap strategy is suggested for next week as markets are expected to move higher. It is recommended to close the strategy by second day of the week as time decay after a truncated week may affect option prices.

Details of the strategy: Min Investment = Rs. 9,985 Points at which strategy closed are 7860 on the upside and 7700 on the downside.