Nifty ended the week flat, but on Monday the market would react to the gains of heavyweights like RIL, HDFC Bank and ICICI Bank. What are the most important levels to pay attention to?
Our eyes are on 26,020 as a near-term target, encouraged by a parallel consolidation bias since January 9, apparently signaling a pause to the downtrend that has been underway since the beginning of this year. However, the systematic increase in the VIX, even if small, suggests that volatility expectations are rising, and so it would be wise to expect wild swings. This would also mean that we should consider reasonable potential for declines to the 200-day SMA, which now stands at 25,090, should we see a decline past 25,600.
Nifty Bank performed better this week, but PSU banks did even better. Which side of the trade would you be on next week?
Between the Nifty Bank and Nifty PSU Bank indices, the latter has the better momentum after closing at a fresh record high for the second day in a row. This would also mean that if there was broad negativity in the market, the PSU Bank Index could fall faster. That said, both indices are positioned for more upside potential unless quarterly earnings surprises put pressure on the index giants.
FIIs are building short positions in Nifty futures. How worrying is it for the January series?
At 2,13,900 contracts, FIIs hold the highest short positions in index futures since March 2025. The long short ratio therefore stands at 9.3, not far from the low. The reason why we haven’t hit a new record low for the ratio despite the high short positions is that index future longs saw a whopping 22.2% increase in positions on Friday. This has pushed FII’s index future longs to 21,814 contracts, near the highest this month. More importantly, this build has occurred on a non-expiry date and there is reasonable potential for the long build to continue, while at the same time forcing hedging of the short positions.
The Nifty Metal index ended the week 4.5% higher. Do you see opportunities for profit booking in metal stocks after the rally?
While a morning star formation early this week, after testing supertrend support, kicked off the ongoing uptrend, we see Friday’s red candle formation as a bullish continuation pattern initially targeting 12,000. That said, the inability to float above 11,450 could signal a reversal.
Angel One was among the top gainers of the week with an 18% increase. How can I trade the shares on Monday?
The immediate rise above the 50-day SMA encourages us to expect more upside potential for the stock, despite having come a long way since the January lows. However, the fast stochastic and the 14-day RSI are about to indicate an overbought situation. Furthermore, we are only 4% away from the November peak, which had recently seen a 20% decline. These two clues warn us to lock in some gains into the upside of the week ahead.
Give us your best ideas for this week.
GODREJPROP | LTP: 1,889 | TARGET: 1,970.00 | STOPLOSS: 1,819.6Despite a long, bad candle formation on Friday, indicating rejection trades that ended upside attempts, the three-day candle formation has formed a morning star formation. This suggests that the downtrend that has been going on since January 8 is likely over and that there is an upward movement around the anvil. This encourages us to aim for 2038, but we will aim for 1970, the horizontal resistance, as an initial target.
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