Nifty may trade in 17,500-18,050 band: Analysts

The Nifty declined 2.5% last week in its steepest weekly fall since June 2022. According to technical analysts, the index, which closed at 17,806, has crucial support at 17,650-17,800, and a breakdown below this zone could attract further selling pressure. Cipla, Apollo Hospitals, Abbott, Nestle, TCS, RHI Magnesita, and Supreme Industries can be bought for trading, said analysts.

SUDEEP SHAH
HEAD - TECHNICAL & DERIVATIVE, SBI SECURITIES

Where is the Nifty headed?
Technically, having closed at an 8-week low, Nifty formed a bearish candlestick pattern on weekly time frame with crucial support at 17,650-17,680. A breakdown below this zone could attract further selling pressure towards the 200-DMA at 17,200-17,250, while resistance on the upside is seen at 18,050-18,100. Above 18,100, the index can revisit 18,290-18,350. Based on the option chain data, Nifty is expected to trade between 17,500 and 18,050.

What should Investors do?
Traders and investors should adopt a stock-specific approach and look to add quality stocks currently outperforming the markets. We expect selective stocks from the pharma, FMCG, and IT to outperform going ahead with positive trade set-up in select names such as Cipla, Apollo Hospitals, Abbott India, Nestle, TCS and Persistent, while stocks from the metal, real estate, and auto sectors could continue incremental weakness. Options traders can initiate a Bear Put spread by buying 17,800 Puts and selling 17,600 Puts with a premium cost of 50 points and a potential profit of 150 points to play the downside move up to 17,550-17,600.

VIRAJ VYAS
TECHNICAL & DERIVATIVES ANALYST, ASHIKA STOCK BROKING

Where is Nifty headed?
Nifty ended 2.5% lower for the week, one of the worst weekly closings since June as momentum dipped to an extreme oversold zone. It also broke the rising trendline formed by joining lows of June 2022 and September 2022 with a gap down, which indicates solid bearish momentum. The index is standing at the strong polarity support seen at 17,700-17,800 zone, failing to hold which it is likely to see further correction towards 17,000-17,100. The index will likely stay ‘Sell on Rise’ if it doesn’t stage a price-intense move above the 18,400 level.

What should investors do?
The index will likely witness a pullback after the strong decline of last week, and traders should utilise it to exit stuck positions. The last week of December has been one of the strongest for the index, as the index closed positive 78% of the time with an average return of 1.24%. The near and medium terms of the index are in jeopardy, and strength is visible in defensive sectors like pharma (Abbott India, Divi’s Lab, and Sun Pharma) and FMCG (HUL and Nestle India). Sectors that continue to show weakness, like IT (Infosys and TCS) and private and public banks, realty, and energy, appear weak and one should avoid such sectors.


ARPAN SHAH
SENIOR RESEARCH ANALYST, MONARCH NETWORTH CAPITAL

Where is the Nifty headed?
Nifty had a sharp selloff last week and closed below the crucial psychological support of 18,000. Midcap and other high-beta sectors, like metal and realty, faced strong selling pressure and underperformed significantly while healthcare was the only sector in green. India VIX has increased 15% during the week, indicating Nifty is likely to trade extremely volatile in the monthly expiry week. The broader range for Nifty is 17,400-18,200. Bank Nifty can also trade volatile in the 40,700-42,400 range.

What should investors do?
Nifty auto and metal indices have given fresh breakdowns, and traders can witness further weakness in these sectors. Traders can look to trade Tata Motors and Tata Steel on the short side as they can go up to their weekly support level of 360 and 98, respectively. The IT index has fallen 27% year to date, and stocks like LTIMindtree can be added for long-term investments. Large-cap stocks like HDFC Bank and RIL have reached important support level of 1,600 and 2,500, respectively, and they can witness some pullback from the current level. From the mid-cap sector, stocks like RHI Magnesita, Supreme Industries, and RK Forge are good additions to the portfolio.