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Published on 12/05/2021 2:10:04 PM | Source: Motilal Oswal Retail Research

Expiry Express Bank Nifty opened gap down but managed to hold 32500 zones by Motilal Oswal Retail Research

Posted in Market Outlook| #Market Outlook #Motilal Oswal

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BANK NIFTY: 32872

Bank Nifty opened gap down but managed to hold 32500 zones and bounced to 33150 levels. It is facing sustained pressure near to 33333 zones from last three session. It closed the day with losses of around 270 points but despite the consolidation, it outperformed the broader market today. It formed a Bullish candle but negated its higher highs - higher lows formation of the last three sessions. Now it has to hold above 32750 zones to witness an up move towards 33333 zones while on the downside support exists at 32500 and 32250 levels.

Expiry day point of view : Overall trend is likely to remain volatile and need to hold above 32750 zones for an up move towards 33333 zones while on the downside support exists at 32500 then 32250 levels. Option traders are suggested to trade with nearby Call like 32900, 33000 strikes or Bull Call Ladder sprea

Trading Range : Expected immediate trading range : 32250/32500 to 33333 zones

Option Writing : Option writers are suggested to write OTM 33500/33600 Call and 32000/31900 Put with strict stop loss

Weekly Change : Bank Nifty is marginally down by 0.10% at 32872 on weekly basis. Bank Nifty VWAP of the week is near to 33050 levels and it is trading 150 points below to the same indicates limited upside

 

NIFTY: 14850

Nifty index opened gap down below 14800 zones on account of weak global cues but since its opening levels, bulls have taken charge to take the index towards 14900. It formed a Bullish candle on daily scale but negated its formation of higher lows of the last five sessions and closed the day with loss of around 90 points. Now, it has to hold above 14800 zones to witness an up move towards 15000 and 15050 zones while on the downside support exists at 14700 and 14600 zones.

Expiry day point of view : Overall trend is consolidative and need to hold above 14800 zones to witness an up move towards 15000 zones while on the downside support is seen at 14700 then 14600 zones. Buy nearby 14800 and 14850 Call or Bull Call Ladder Spread

Trading Range: Expected wider trading range : 14750 to 15000 zones

Option Writing : Aggressive Option writers can sell 15000 Call and 14650 Put with strict double stop loss   

Weekly Change : Nifty index is up by 0.19% at 14850 on a weekly basis. Nifty VWAP of the week is near to 14900 levels and it is trading 50 points below to the same indicates overall range bound bias.

 

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Market Strategy: Covid-19 2nd wave dents sentiments; Corporate commentaries turning cautious

The advent of the second COVID wave has muddied sentiment and impaired the FY22E earnings visibility. With multiple states entering into extended lockdowns and restrictions, we see downside risks to our FY22 earnings estimates. 4QFY21 earnings are progressing largely in line with our expectations but management commentaries in BFSI/Consumer/Auto have turned cautious even as it remained upbeat in IT and Metals. The interplay of the resurgence in COVID cases and the pace of vaccination would decide the trajectory of economic recovery going forward. The Nifty now trades at 12M forward P/E of ~19.5x, ~3% above its historical average of 18.8x. At ~2.9x, Nifty P/B is well above its historical average of 2.6x. We are OW BFSI, IT, Metals and Cement, Neutral on Consumer, Healthcare, Auto, Telecom and UW on O&G, Infrastruct

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