Nifty 50 to remain volatile with bullish bias; RVNL, Suzlon among top technical picks by Rupak De of LKP Securities

Stock market today: Financials and metals were the primary drivers of Monday's declines in the domestic benchmark indices, the Sensex and Nifty 50. A report indicating that the markets regulator was looking into claims of "front-running" at Quant Mutual Fund also caused some small- and mid-cap stocks to fall.

The Nifty 50 began trading at 23,382.30 level, down 118.80 points or 0.51%, while the 30-share BSE Sensex opened down by 324.18 points or 0.42% at 76,885.65 level.

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Analysts predicted that the national budget declaration next month and the earnings season will have an impact on the direction of the markets.

On the future and options (F&O) market, Bank Nifty so far added 60.93 lakh contracts in open interest whereas 84.31 lakh have been added in Put open interest, while Nifty 50 so far today have added 90.54 lakh contracts in open interest; whereas 1.62 crore have been added in Put open interest. 

Technical views by Rupak De, Senior Technical Analyst, LKP Securities on F&O market

Bank Nifty

According to Rupak De, for Bank Nifty, the call writers have increased positions at the 51,500 to 51,700 strikes, indicating a cluster of resistance. Put writers have unwound their positions at the strikes between 51,500 to 51,800, suggesting an overall weakening of the banking index. Higher call writing has led to a fall in the PCR from the recent high. Maximum call writing was seen at 52,500, marking the near-term cap for Bank Nifty.

Technically speaking, Bank Nifty has formed a bearish engulfing pattern, indicating a possible bearish reversal in the trend. The correction might start once Bank Nifty decisively drops below 51,500. Below 51,500, the index might drift down towards the 50,800-51,000 range. On the higher end, resistance is placed at the 51,800-52,000 bands. A comfortable breach of the resistance band might give the index strength to move towards 52,500 and beyond.

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Nifty 50 

On the options front, puts at 23,500 and 23,600 have witnessed heavy unwinding, suggesting the possibility of the index falling lower in the near term. A rise in call writing at 23,500 further boosted the weaker sentiment in the market. Moreover, maximum call writing is visible at the 24,000 strikes, whereas 23,000 has witnessed maximum put writing, indicating a larger range for market ahead of the Union Budget. The PCR ration has fallen to 1.04 on due to heavy call writing. The FII long short ratio standing in favour of more longs with a 57% net long in the index future suggesting slightly bullish stance, explained Rupak De. 

Technically, the Nifty 50 has been hovering within the 23,300 to 23,600 range, indicating indecisiveness, which sets the stage for a very volatile monthly expiry. A decisive move above 23,600 might take the index towards 24,000 in the short term, whereas failure to hold above 23,300 might trigger panic in the market. Below 23,300, the Nifty 50 might fall towards 22,750 in the short term.

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Technical stock recommendations for the week 

Buy Rail Vikas Nigam Ltd (RVNL) at ₹410; Target Price of ₹440; Stop Loss of ₹394

According to Rupak De, the stock has given a consolidation breakout on the daily chart, suggesting a rising optimism among the investors. Besides, the stock has moved above a critical moving average. The RSI is in bullish crossover. In the near term, the stock might move towards 440; while a support is placed at 394.

Buy Granules India Ltd at ₹491; Target Price of ₹530; Stop Loss of ₹470

The stock has given a flag pattern breakout on the daily chart, suggesting a rise in optimism. It has been sustaining above the critical moving average. The RSI is in a bullish crossover and rising. Over the medium term, the stock might move smartly towards 530. On the lower end, support is placed at 470, explained Rupak De.

Buy Suzlon Energy Ltd at ₹53; Target Price of ₹60; Stop Loss of ₹49

The stock has given a positive breakout after days of sideways consolidation, which indicates a rise in optimism. Besides, the price has been sustaining above the critical moving average. The RSI is in a bullish crossover and rising. Over the medium term, the stock might move smartly towards 60. On the lower end, support is placed at 49, advised Rupak De. 

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisi.