What a series the June one turned out to be. Expiry session took the Nifty 50 past its previous record high and the index ended with gains of 650 points for the series.
Can this continue for the July series as well? Lets find out:
The July F&O series is starting off on the back of strong rollovers. Nifty 50's rollovers are seen at 76 percent compared to a three-month average of 70 percent. The index will also start the new series with a high Open Interest base, which signals fresh long positions being built and carry over, which can keep the trend strong.
Nifty 50's trend has been strong and it is constantly forming higher highs and higher lows on the daily timeframe, something that is characterstic of an uptrend. The index has taken strong support from its 21-EMA and has managed to make a fresh swing high. The most recent fall towards 18,650 halted at the 21-EMA support on the daily chart, which pushed the index towards its lifetime high. The Nifty 50 is within striking distance of the 19,000 levels and is expected to test levels of 19,200 in the coming days, where the ascending triangle resistance is placed.
The Nifty Bank index has been an underperformer over the last few weeks. It is facing a tug-of-war at levels of 44,200. Unlike the Nifty 50, the Nifty Bank closed below its 21-EMA for a couple of days before finally breaking past that level on expiry day. The index has given a breakout from ascending channel pattern on the daily charts, suggesting that it can make an attempt towards levels of 45,000 - 45,300 during this series, as long as it sustains above the breakout levels. The immediate support is seen at levels of 43,900, where the 21-EMA and the Ichimoku Kijun is placed.
An index that can outperform in the July series is the Nifty Financial Services index which is currently seeing a multi-month high Open Interest base, which reflects strong interest from market participants. The index has given a breakout from the cup and handle pattern, which will be confirmed in case of a weekly close above levels of 19,500. The continuation pattern breakout can push the index higher by another 5-7 percent and also provide lucrative buying opportunities in the midcap financial space for the next few weeks. Critical support on the downside is placed at levels of 19,000.
Top Stock Picks For The Series
The Nifty Pharma index has been one of the outperformers over the last few weeks. The index has gained strength, which has pushed midcaps and selective largecap stocks higher. Among them, Dr Reddy's has given a consolidation breakout on the daily and weekly charts with incremental volumes, which can push the stock higher. The stock is showing strong relative strength charts, which reflects continued outperformance in the coming days. One can buy with a target of Rs 5,350 for the series and a stop loss of Rs 4,950.
On the other hand, the Nifty Metal index has been muted for a while, but JSW Steel has been a consistent outperformer. The stock is on the cusp of a major breakout on the weekly charts, which will get confirmed on a weekly close above 785 levels. The stock has already confirmed a breakout on the point and figure charts on the daily timeframe, cluster targets of which come up to Rs 860. One can buy for the series with a target of Rs 840 and a stop loss of Rs 740.
Gaurav Bissa is Vice President of Equity Advisory at InCred Equities.
(Edited by : Hormaz Fatakia)
