Uncertainty looms large; Nifty needs to cross 17,450 level to reach 18,000

Technical charts are pointing to a period of uncertainty this week. If the Nifty crosses and sustains above the 17,450 level, it could move towards 17,700-18,000 levels, said analysts. However, if it breaks below the 17,100 level, the index may fall to 16,800-16,500 levels, they said. Dr Reddy’s Labs, Berger Paints, M&M Financial, HDFC Bank, Tata Chemicals, Jubilant Ingrevia, and HBL Power are some of the suggested trading picks.

SRIRAM VELAYUDHAN
TECHNICAL ANALYST, IIFL SECURITIES

Where is the Nifty headed this week?
The recent up-move has mainly been a short covering-led rally, facing resistance near 17,429 levels, where the gap zone is placed. We will be cautious going into the new week as US unemployment rate numbers last Friday increases prospects of aggressive tightening. Equities will be sensitive to global economic data points like inflation, 10- year yields, crude oil, and the dollar index. Thus, we believe the market is likely to stay in the range of 16,800 to 17,400.


What should investors do?
In the event of weakness, traders with a risk appetite can look to sell Nifty futures near 17,250 for a target of 16,800 and place a stop loss at 17,400. We believe IT, auto and pharma will likely outperform on the sectoral front, while FMCG and cement may underperform the market in the coming days. Irrespective of market volatility, investors can build positions in select names like Infosys, Dr Reddy’s Labs, Berger paints, M&M Financials, HDFC Bank, and Tata Chemicals from a medium term investment horizon. From a trading perspective, one can buy Zomato for a target of Rs 77 and place a stop loss at Rs 66.

RAJESH PALVIYA
HEAD TECHNICAL & DERIVATIVES, AXIS SECURITIES

Where is the Nifty headed this week?
On the weekly chart, the index has formed a small bullish candle with shadows on either side, indicating indecisiveness among participants regarding the direction. The chart pattern suggests that if the Nifty crosses and sustains above the 17,450 level, it would witness buying, leading the index towards 17,700-18,000 levels. However, if the index breaks below the 17,100 level, it would witness selling, taking the index towards 16,800-16,500.

What should investors do?
This week, one can focus on stocks like BEL, HAL, NMDC, Grasim, Bharti Airtel, Dr Reddy’s, Cipla, Deepak Nitrite, and Tata Chemicals. We suggest a bearish strategy called Put Ladder for the weekly expiry on October 13. Here traders need to buy one lot of Nifty 17,300 put at Rs 132 and sell one lot each of 17,050 put at Rs 51 and one lot of 16,800 put at Rs 18. The maximum profit of Rs 9,350 will be attained at 17,050 levels, while the strategy will start making a loss below 16,800. The cost of the strategy involves an outflow of Rs 3,150, which is the maximum loss if Nifty closes and remains above 17,240 levels on expiry. However, any sharper movement on the lower side could result in losses; hence, exit the strategy below 16,650- 16,600.

SAMEET CHAVAN
TECHNICAL ANALYST, ANGEL ONE

Where is the Nifty headed this week?
Since Nifty has managed to surpass 17,200 levels and is maintaining its position, 17,200- 17,000 now becomes a sacrosanct zone for the market. Additionally, we can observe a positive crossover in daily ‘RSI-Smoothened’, which may provide a helping hand for bulls. If the global market supports us, we being the stronger market, is expected to continue in the upward direction. As far as levels are concerned, 17,400- 17,650 are the immediate hurdles for the Nifty.

What should investors do?
We advise traders to remain sanguine and look at the Nifty Midcap 50 placement. We like Jubilant Ingrevia for the coming week. Looking at the weekly time frame chart, we see prices gearing up for a strong move. We recommend buying for a target of Rs 590. Traders can participate by following strict stop loss at Rs 519. Also, HBL Power looks attractive the way it behaved on Friday. The stock witnessed a massive surge after confirming its breakout from the ‘Horizontal Line’ resistance of Rs 105. Buy at Rs 108-112 for a target of Rs 128 and a stop loss of Rs 103.