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Index Outlook

The domestic benchmark index rallied the week due to strong global cues, cooling oil prices and consistent FII inflows. Finally, Nifty Future closed on positive note at 17833 up by 1.73% (WoW) with an addition in open interest of 0.79% (WoW) indicating neutral bias in the market. During the week, India VIX down by 9.36% and closed at 17.72%. We expect volatility will remain high due to geopolitical issue. Another derivatives indicator, Nifty Put-Call ratio currently stands on higher side at 1.10, up by 5.77% (WoW). Technically, the index on a daily scale has formed golden cross formation as 50 days moving average has cross the 200 Days moving average from below. Moreover, the index has formed rounding bottom pattern, whose breakout is pegged at 18000 levels. If the index manages to close above 18000, then it may test the levels of 18500-18600. The 34 days exponential moving average is placed close to 17360, which will serve as a strong support for the medium term. As long as, the index holds above 17360, upmove will continue. A daily close below 17360 may result in selling pressure. Going forward, Rupee movement against the Dollar, bond yields movement, economic data, progress of monsoon, Fii's flow, global cues, and crude oil price movement will dictate the trend on the bourses next week.

Sectoral Activity

* Last week, Infrastructure, Cement, Media, Power, Technology, Pharma and Automobile sectors saw open interest addition. Top names included INDIGO, SYNGENE, BAJAJ-AUTO, ACC, SHREECEM, PERSISTENT, PVR, CONCOR, BSOFT, ABBOTINDIA, TORNTPOWER, TATAPOWER, BALKRISIND and MINDTREE.

*. Textile sectors saw open interest unwinding on the back of short covering in the stocks.

* In the Banking space, RBLBANK, INDUSINDBK, and AUBANK saw long build up. 4. This week, some buying can be seen in GSPL, AMBUJACEM, TATAPOWER, COFORGE, EXIDEIND, ASTRAL, and IOC while selling pressure can be seen in PVR, SYNGENE, PIIND, and TATAMOTORS. 5. From sector space, Banking, Technology, Infrastructure, Cement, Pharma and Automobile stocks are likely to remain in focus in the forthcoming week.

Weekly Derivatives Synopsis

Technical View

Nifty

* Technically, the index on a daily scale has formed golden cross formation as 50 days moving average (DMA) has cross the 200 DMA from below. Moreover, the index has formed rounding bottom pattern, whose breakout is pegged at 18000 levels. If the index manages to close above 18000, then it may test the levels of 18500- 18600.

* On the downside, the index will find short-term support near 17550, where the 21-days exponential moving average (DEMA) is situated. The 34 DEMA is placed close to 17360, which will serve as a strong support for the medium term. As long as, the index holds above 17360, upmove will continue. A daily close below 17360 may result in selling pressure.

* The RSI on the daily scale is taking support around center point, indicating strength. Moreover, the Stochastics oscillator on a daily scale has formed a bullish crossover. ?In the short term, 17550 and 17360 will act as support points, whereas 18000 and 18600 will act as resistance points.

BankNifty

* The index began the week on a strong note, and continued bullish momentum throughout. As a result, the index has broken out of its short-term consolidation and settled the week on a positive note at 40416. Moreover, the index has already witnessed the breakout of medium term consolidation. According to this breakout, the index may test 41500 in the short term and 45000 in the medium term.

* On the downside, the index will find short-term support near 39073, where the 21-DEMA is situated, followed by short term swing support, which is placed close to 37950. A daily close below 37950 may result in selling pressure.

* The RSI on the daily scale is positively placed. However, the Stochastics oscillator on a daily scale is placed close to overbought zone. As a result, as long as Banknifty holds the support level of 37950, a buy on dips strategy should be employed. ?In the short term, 39070 and 37950 will act as support points, whereas 41500 and 45000 will act as resistance points.

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