Sumeet Bagadia, Executive Director at Choice Broking said that 17,500 would act as resistance for the near term and once the Nifty settles above it can expect further strength till 18,000/18,300 levels.  

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In an interview with Zeebiz's Kshitij Anand, Bagadia said that the Nifty index has support at 16,830 levels, while resistance comes at 17,500 levels on a weekly basis, either side breakout may suggest the further direction. Edited Excerpts -

Q) Based on the January expiry, how do you see markets in the February series? Which are the important levels to track?

A) The January series saw a volatile movement in the Nifty that swung in both directions and settled at 17,101.95 levels on expiry day. On a month-on-month basis, the Nifty index plunged almost 1.6 per cent, while the Banknifty registered a gain of 6.2 per cent and closed at 37689.40.

On the rollover front, the Nifty50 saw a rollover of 74.62% versus six -months average of 80.92% which suggests that few positions were carried forward in the next series.

While, on the other hand, Banknifty saw a rollover of 84.26% versus a six-month average of 82.13%.

On the options front, the highest open interest is at 16500 strike price PE with 74308 contracts followed by 17000 strike price PE with 46365 contracts while on the Call side, the 18000 CE is highest in terms of OI with 40229 contracts followed by the 17500 strike price with 23102 contracts.

Based on recent data, the Nifty has a broader range of 16500-18000 levels for the February series.

Although, there are a few events like the Indian Budget, RBI policy & Elections that could keep the market more volatile in the coming month. Investors should focus on the sector-specific moves, which could be on the radar on Budget Day.

Technically, the Nifty has immediate support at around 16830 levels, crossing below the same can extend the fall till 16500/16300 levels, while on the higher side, 17500 would act as resistance for the near term, and once the Nifty settle above it can expect the further strength till 18000/18300 levels.  

Q) Any Budget picks that investors can look at?

A) Budget Pick: GNFC

On the daily chart, the stock has given a Symmetrical Triangle Breakout, which indicates a bullish strength in the counter.

Moreover, the stock has traded above Ichimoku Cloud & Middle Bollinger Band formation, which suggests an uptrend in the counter for the long term.

Furthermore, the stock has also moved above the 50-days Simple Moving Averages that supports the bullish rally for the near term.

In addition, the prices are trading in Higher Highs & Higher Lows formation on a weekly timeframe, which suggests a continued uptrend in the stock.

An indicator MACD & Stochastic witnessed positive crossover on a weekly scale, which adds bullishness in the prices.

Hence, based on the above technical structure, one can initiate a long position in GNFC around 464 or a fall in the price till 460 levels, which can be used as a buying opportunity for the upside target of 495/510 while the support is placed at around 445/435 levels, so 435 levels should be considered as a stop loss on a closing basis.

Q) Tracking US Fed jitters Sensex, and Nifty50 fell more than 1.5% ahead of the Budget week. How do you see markets in the coming Budget week?

A) Ongoing political tension between Russia- Ukraine keeping pressure on investors' nerves which leads the index to end in loss on weekly time frame.

Overall, it was a volatile week for the traders as we saw continued sell-off from the first day of the week, the benchmark index Nifty50 made a low at 16836.80 during the week and closed at 17101.95 levels on Friday with a weekly loss of 2.9% while Bank nifty managed to hold marginal gains & settled at 37689.40 levels with 0.3% positive moves.

On the sectoral front, Nifty IT & REALTY dragged more than 5% followed by Nifty Metal while on the other side; Nifty PSU BANK inched up by 7% on a weekly basis.

Technically, the Nifty50 index has confirmed the breakdown of the Bearish Engulfing Candlestick pattern on a weekly chart.

However, on the daily scale, the index has taken good support at 78.6% retracement level of its prior rally. A momentum indicator Stochastic & MACD is also trading with negative crossover, which adds bearishness in prices.

At present, the Nifty index has support at 16830 levels while resistance comes at 17500 levels on a weekly basis, either side breakout may suggest a further direction.  

Q) In terms of sectors, banks, and auto managed to outperform and IT and Realty stocks tumbled. What led to the price actions? What is causing panic in the IT space?

A) Volatility in the dollar index along with the upside moves in bond yield as well as continuous fall In the Nasdaq Index was one of the reasons to fall in the IT index.

On the technical front, the index has formed a Bearish Engulfing Candlestick Pattern at the top of the monthly chart which suggests the trend may reversal and we can see further sell-off in the counter.

On a weekly chart, the Index has given a breakdown of the distribution phase and started trading below 21 WMA which further adds weakness in the counter.

A momentum indicator MACD is also trading with negative crossover, which adds bearishness in prices but the Relative Strength Index (RSI) is trying to bounce from the overbought zone with the support of 200-DMA.

At present, the Nifty IT index has support at 33100 levels while resistance comes at 36075 levels.  

Q) Should one consider buying post the Budget Day to avoid volatility and clarity?

A) Proposed accelerated discontinuation of pandemic stimulus and faster than expected normalization of policy rates by the US Fed has mainly brought volatility in the global equity markets. Tentatively, starting from Mar. 2022, the US Fed is likely to hike rates three times in 2022.

Primarily, because of global cues equity market will continue to be volatile in the near term. Despite volatilities, we are recommending investors to consider investment into economy-facing sectors like banks, autos, cement, etc.

Q) FIIs remain net sellers for more than Rs 30,000cr in the cash segment of Indian equity markets – what is causing the panic – is it the US Fed or Budget 2022?

A) Since the start of the year, the domestic market is facing excessive selling by the FIIs, mainly on account of the proposed discontinuation of pandemic stimulus and faster than expected policy rate normalization by the UD Fed.

Apart from profit-booking, this is also one of the key reasons, why the FII’s are a net seller in the current month till date.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)