Indian equities ended Monday’s session in positive territory, with buying interest seen across IT and metal sectors. The broader market sentiment was lifted by rising expectations that the U.S. Federal Reserve may initiate interest rate cuts in the coming months, which provided a tailwind for risk assets globally.
These rate cut hopes helped investors look past concerns about potential trade tensions, particularly the possibility of the United States imposing new tariffs on Indian exports. The optimism around easing monetary policy in the U.S. offered a cushion against global uncertainty and supported gains across key indices.
The BSE Sensex rose 418.81 points, or 0.52%, to close at 81,018.72, while the NSE Nifty added 157.40 points, or 0.64%, to end at 24,722.75.
With this, analyst Jay Thakkar, Head Derivative and Quant Research at ICICI Securities interacted with ET Markets regarding the outlook on Nifty and Bank Nifty for the week ahead. Following are the edited excerpts from his chat:
What do the markets look like right now and what’s your take on the US-India trade deal?Markets did react negatively since there was no US-INDIA trade deal, however, once the deal happens may be in August or September thereafter the fear or downside risk will reduce.
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Indian markets may see some volatility going ahead, particularly What is the current view on Nifty, especially with a lack of direction and not kuch support from the ongoing earnings season?Nifty may face resistance in the range of 25100-25300 levels; however, since it has been closing in the negative territory for the last 5 weeks, some bounce back can’t be ruled out. The crucial support on the lower side is 24000, hence the range for the next week is 24000 to 25300 levels. The IVs had fallen below 10 and the IVP and IVR had fallen to as low as 0.40 each which is an extreme level and from these levels usually there is a bounce in IVs due to which maximum of the time, we see correction in the markets which so far, we have witnessed. This also indicates volatile sessions ahead until the rise in IVs cools off, so the overall trend in the market seems to be volatile within which there will be some bounce back as well but that will witness selling pressure i.e. it will get sold into until the IVs don’t cool off later.Are banks better placed right now? What is the banking index indicating?Bank Nifty, like that of Nifty, has clearly reversed it trend from up to down and now the range for the Bank Nifty for this week is 55000 to 56,500 levels. Since, the IVs of BankNifty is also low so there will be volatility going ahead this week as well and at the same the Indices are quite oversold so a bounce back cant be ruled out, hence there will be both the sides movements this week.With such volatility, how do you suggest that traders navigate the indices?In this volatile scenario, the traders should not carry any naked derivatives positions; they need to hedge or create wings in order to reduce the overnight risk. Mainly, when the IVs are expected to rise, the long options strategies like long iron condor and long iron butterfly have a higher probability of success.Now that we are into the August series, what does the rollover data indicate? What are the trends suggesting?The Nifty rollover has been less than the last 3 months and 6 months average, which are 78.11% and 78.85% respectively. The rollover into the August series has been 75.71% which is less than the average.What idea is the long short ratio giving right now, especially where we see Nifty going down?The long short ratio now stands at 8.5% long, which is quite oversold, and in most cases, there is a bounce back from this level, so some short covering cannot be ruled out from these levels.Which sectors are you currently focusing on?Nifty auto Index looks positive and the same is supported well with the Monthly auto sales numbers. Further, the Nifty FMCG Index looks positive as overall the results have been better relatively and there has been short covering as well.Any stocks looking well-placed within these sectors?Stocks looking better in these sectors are as followsTVS Motors has witnessed a long buildup with a breakout as well with an increase in volumes, so it’s a price-volume and Open Interest breakout. The short-term target will be 3200/3350, with a stop loss of 2800.Heromotocorp has seen some consolidation prior to the upward breakout and with this breakout, there has been an increase in volumes and OI, clearly indicating a price volume and OI breakout. Thus, long positions can be initiated for the targets of 4700 and 4900 with a stop loss of 4350.Tata Consumer looks positive for the targets of 1150 and 1200 stop loss of 990. There has been short covering in the near term, which can lead to a breakout on the upside.Godrej CP has been consolidating within a range of 1150 to 1300, and the previous up move had come on account of short covering. Once this consolidation is over, the breakout is likely on the upside as there is some more short covering already witnessed and the sector seems positive in the near term(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)