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By Jay ThakkarAVP- Technical Research, Anand Rathi Share and Stock BrokersWhere are we: The Nifty closed well in the positive territory in the last trading session and it has managed to close the week well above 11,600 levels.
The Index has been trading within a range of 11500-11700 for almost two weeks now.
Hence, it is stuck within this consolidation which is in the form of a downward sloping parallel channel.
However, this consolidation appears to be a pause within an ongoing uptrend which is likely to eventually break in the upward direction.
What is in store: The Index has been consolidating with this narrow range of 11500-11700 wherein at 11700 strike has the maximum open interest on the call option side, whereas the maximum open interest on the put option side is at 11,500 strike.
Hence, both from technical as well as derivatives analysis, the range for the index is well defined i.e.
11,700-11,500 levels.
What could investors do: The rise in the index since the end of February has been quite an impulsive one till now.
Hence, investors as well as traders are advised to continue with their long positions.
Since the index has taken a pause from its all-time high levels, the traders have to be sector and stock specific in the short term.
Sectors such as auto, banking, metals and pharma are likely to do well in April series.
The long-term trend remains up as on the monthly charts — till the 10,500 levels doesn’t break — the higher tops and higher bottoms pattern will remain intact.
Since, it’s an election season, the VIX is likely to increase and the range for the same is 15-35.
So, traders and investors are advised to hedge their positions.
