Nifty: Scrip Specific Movements

Nifty: Scrip Specific Movements

Nifty gained for the fourth week amid highly volatile week. RBI's measures to strengthen rupee by tightening liquidity had its negative effect on...

Sastry1Nifty gained for the fourth week amid highly volatile week. RBI's measures to strengthen rupee by tightening liquidity had its negative effect on banking stocks. Nifty gained because of IT and FMCG sectors. Last week of F&O settlement is ahead and scrip specific movements are most likely in view of derivative expiry and Q1 results. Further, Nifty too can be expected to gain further as it is trading at the highest level for the current derivative series. However, based on the current chart pattern, Nifty is in the process of topping out for short term and a reasonable correction can be expected sooner than later. Q1 results, FII flows, global cues, currency fluctuation would guide the market movement and high degree of volatility can be expected. Based on fundamentals and valuations, any steep fall is an opportunity for medium and long term investments. Quality stocks can be accumulated under SIP basis. Technically, Nifty is trading above 200 DMA and Golden Cross (50DMA above 200 DMA) is in operation, suggesting no immediate threat to long term bullishness. If Nifty is able sustain above 5750 even in the corrections, a new high could be in place during the year. Nifty is bullish in all time frames now and short term trend would get disturbed if Nifty closes below 5975. As Nifty has been oscillating in a narrow zone of 750 points (6240 to 5480) in the last six months, a clear direction can be expected sooner than later and the current calendar year range of 750 points would usually get widened to more than 1250 points before the end of the year. For the coming week, Nifty spot is expected to face resistance at 6105, 6185, 6265 and find support at 5950, 5875, 5800. Nifty, presently in short term bullishness, would get out of the same only on a close below 5975.
Advice for Traders
Nifty, though presently bullish, appears to be in the process of topping out and due for a correction in the new derivative series. However, clearing for the current series could be between 6000 and 6100. Further, scrip specific movements can be expected in view of the F&O expiry and bearish scrips can become further weak and strong scrips can become further strong. Low risk traders could consider a calendar spread of Long July contract and Short August Contract with appropriate hedge for August. Alternatively, July 6100 put option may be sold with a Buy of August 6100 Put option.
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