CREALTH NIFTY VIEW
Nifty had formed a Dragonfly Doji on weekly charts which showed indecision among the Bulls and Bears! With North Korea attacking Japan Nifty was quite volatile this week but didn’t break on either side. No new trend will be established untll and unless Nifty breaks 9935 on the upper side, 9750 on the down side on closing basis. The dry volumes in Nifty in the past 1 week had given an early indication of a range-bound expiry week.
Dragonfly Doji – A dragonfly doji is a type of candlestick pattern that signals indecision among traders. The pattern is formed when the stock’s opening and closing prices are equal and occur at the high of the day. The long lower shadow suggests that the forces of supply and demand are nearing a balance and that the direction of the trend may be nearing a major turning point.
Our suggestion would be to stay away from Nifty trades until and unless Nifty establishes a new trend. Nifty will make a decisive move on Friday after India’s GDP no.’s , monthly expiry today. Hence one should keep a close eye on Friday’s closing too.
Expiry Options Strategy
Create a Bear Put Spread i.e Sell 9800 PE at 7.5-8 & Buy 9850 PE at 15-16 of 31 Aug expiry. As OI is highest at 9900 CE & 10000 CE hence expiry above 9900 seems unlikely. This should only be initiated only if Nifty opens below 9885.
Bear Put Spread – A bear put spread is a type of options strategy used when an option trader expects a decline in the price of the underlying asset. Bear Put Spread is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower strike price.
All sectors are having a mix match story as Nifty remains range-bound. The next breakout/breakdown will be led by Bank Nifty with the structural changes in PSU Banks. With global tensions increasing it is advisable to stay away from Nifty Metal & Pharma as they are positively correlated with foreign markets.
STOCK SPECIFIC VIEW
Bullish Stocks – Bata. Ujjivan.
Bearish Stock – Bank of Baroda, Apollo tyres.
CREALTH SUGGESTION TO TRADERS & INVESTORS
Our suggestion to all traders will be to avoid long, short positions in index & trade stock specific themes. Housing Finance looks like a promising sector & is expected to perform really well in the coming months. We like L&T Fin, M&M fin in the above pack though it is better to hedge your position as their can be a sudden gap down any day & no one will get time to cut their position on SL due to global issues.
Our suggestion to investors will be to book profits in mid, small cap stocks at higher levels & have cash in hand to enter at lower levels as this correction was much awaited and one will get quality stocks at lower levels. So sit like a hawk to enter at lower levels and don’t just jump at current levels as more pain can be seen ahead if Nifty breaks 9750.
Disclaimer – All the above writings are just a technical view, research! Every person should do their own research before investing/trading. Our clients may have position in the above mentioned stocks!