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ICICI Securities

Published on 23/01/2020 11:30:31 AM

Bank Nifty: Close above 32000 required for fresh up move…

* On the back of global jitters, volatility remained high in the currency market. Due to this, movement was seen on both sides in the banking and financial space. The OI declined in the past few days as the Bank Nifty moved towards the lowest level of the series. However, it reverted from its highest Put base of 31000

* PSU banks remained under pressure but participation continued in private banks, which provided cushion. Stocks like HDFC Bank and Axis Bank are likely to perform well from the current levels, which will pull the index higher

* The highest Put base is placed at 31500 and 31000 whereas a close above 32000 would trigger fresh upsides. Recently, yields had moved up due to higher inflation. Later, it was supported by a surge in crude oil prices. With crude seemingly making a top near $72, we also expect limited upsides in yields. This should bode well for the banking space

* The current price ratio of the Bank Nifty/Nifty fell towards 2.55. We feel that once the index manages to end above 32000, outperformance can be seen in the banking space, which will pull the ratio higher towards 2.60

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ICICI Securities

Published on 23/01/2020 11:30:20 AM

Level of 12200 to remain support for the week

* After four weeks of consolidation below 12300, the Nifty finally ended above the level. A gradual and consolidated move towards 12600 is expected in the coming weeks. However, some volatility may be seen near expiry. The Put base has become higher at 12200 while it would remain a support on any intermediate decline

* Call positions have been the highest at 12500 since the start of the series with additions seen even at the 12600 strike. These would be the Nifty target levels

* Volatility has been on an upward bias as we are moving into Budget. This week also it reverted from lower levels of 12.5% to 14%. The hurdle for volatility is placed at 16% from where it should again start reverting lower, thus keeping the overall bias of the equity index positive

* The Nifty is getting support from non-banking heavyweights from the cement, metals, pharma, FMCG and auto pack, which is also keeping the momentum intact in the broader market. We believe midcaps from these sectors would remain in the limelight even in the coming sessions

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ICICI Securities

Published on 23/01/2020 11:27:17 AM

Nifty

Technical Outlook

Equity benchmarks extended their breather on Wednesday and ended at 12107, down 63 points. In the coming session, Nifty futures are likely to open flat tracking muted global cues. We believe if it holds above Wednesday’s low (12110) that would keep pullback options open. Hence, intraday dip towards 12100-12125 should be used to create long position for target of 12165. Going ahead, we do not foresee the index breaching the key support threshold of 12100-12000. Therefore, any dip from here on should be utilised as incremental buying opportunity. Key point to highlight during up move since October 2019 is that, the index has not corrected for more than 365 points and time wise intermediate corrections have not lasted for more than three to four consecutive sessions. In the current scenario, the index has already corrected 340 points from all-time high of 12430 in past three sessions. We expect it to maintain the same rhythm by arresting ongoing breather near the psychological mark of 12000 in the next session or two.

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