Chartist Talks: This analyst suggests Bull Call Spread strategy as Nifty to maintain positive momentum next week

Markets have demonstrated remarkable resilience, with each dip being met with buying interest. Geopolitical tensions and concerns about the Yen carry trade have eased somewhat, contributing to a global market rebound. The overall setup is bullish with Nifty forming a Higher top-Higher bottom pattern for the past 3 weeks. If Nifty surpasses 24,940, it could potentially advance towards 25,150-25,200 levels in the short term.

Do you expect the Bank Nifty to climb above the downward sloping trendline? And will that take it towards a record high in September?

At present, the Nifty Private Bank index has broken above the downward-sloping trendline, primarily driven by the strong performance of ICICI Bank and Kotak Mahindra Bank. However, the Nifty Bank index has not yet achieved a similar breakout due to the underperformance of key PSU banking stocks. Going forward, 51,200 level is a critical resistance for the index. A rise above this level could trigger short covering, potentially pushing the index towards 51,900-52,100 range, with support seen at 50,420-50,500 zone.

What is your trading strategy for the Nifty 50 to benefit from the ongoing upward rally?

We expect the positive momentum in the next week to continue. We can consider taking a Bull Call Spread in Nifty. Traders can consider purchasing 24,900 strike Call and selling 25,100 strike Call. The maximum risk in the above spread is 68 points (Rs 1,700) incase Nifty closes below 24,900 level. Maximum potential reward can be 132 points (Rs 3,300) if Nifty manages to close above 25,100 in the following weekly expiry.

Do you think the Nifty Financial Services index inching towards 24,000 mark as it is about to see trendline breakout?

We are close to seeing a breakout from a downsloping trendline in the Nifty Financial Services, with ICICI Bank pushing the index higher. Currently, the index is trading near the 50 percent Fibonacci retracement level of its previous decline from 24,046 to 22,497. A rise above the immediate resistance at 23,455 could drive the index gradually toward the 24,000 mark. However, additional support from HDFC Bank, which holds the highest weight in the index and has been trading sideways for the past 32 sessions, will be crucial.

Do you expect the robust rally in Bajaj Auto considering the saucer pattern as well as trendline breakout?

Bajaj Auto has been trading in a higher top-higher bottom pattern. On Friday, the stock experienced a significant price surge, with the highest trading volumes since January 25, 2024. This marks the fifth consecutive week of gains for the stock. Both the daily and weekly RSI (Relative Strength Index) indicate strong momentum. While the stock may experience some consolidation following the recent surge, we expect the uptrend to continue in the near term.

Will the trendline breakout take InterGlobe Aviation above Rs 5,000 soon?

Post 13 weeks of sideways consolidation, the stock has witnessed a breakout baked by volumes. After 13 weeks of sideways consolidation, the stock has broken out with strong volumes. It has also closed above its 200 EMA (Exponential Moving Average) and near the high point of the day, which is a bullish indicator. The weekly RSI has shown a bullish crossover and is currently at 72. We anticipate the positive momentum to persist, with the stock potentially reaching the Rs 5,100 level, while support is seen in Rs 4,560-4,520 range.

Is Minda Corporation looking overbought?

Minda Corporation experienced a dramatic breakout on Friday, soaring 17.3 percent with trading volumes reaching their highest level ever. We anticipate that the stock’s positive momentum will persist in the near term. Given that both the daily and weekly RSI are in the overbought zone, a more stable strategy at this point would be to consider buying on dips.

Your top 2 bets for next week?

Coal India

The stock has been gradually inching higher and is trading in a higher top higher bottom chart structure. As the stock is trading near all-time high, all the moving averages and momentum based indicators are supporting the overall bullish chart structure. The stock has also witnessed a bullish crossover on the daily RSI. The stock can be accumulated in the zone of Rs 536-540 with the stop-loss of Rs 517. On the upside it is likely to test Rs 575 level.

Bharti Airtel

The stock has witnessed a consolidation breakout on the daily charts. The weekly RSI is also consistently quoting above 70 which is a bullish sign. The stock has witnessed strong delivery based buying prior to the breakout (above 70 percent during the first three days of the week). Going ahead the stock is likely to test the level of Rs 1,590, followed by Rs 1,620. Maintain the stop-loss of Rs 1,440.

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