Edited excerpts from a chat:
After Nifty broke its 6-day-long winning streak on Friday, how bearish or bullish are you for the outlook ahead of the August series expiry next week?
Thursday’s stalling and Friday’s drop is more of an outcome of price exhaustion having tested the upper bollinger band. The move from the lower to the upper bollinger band took less than two weeks, during which period, Nifty rose over 3%. So, the inability to pierce past the 25200 band, and a return to 24850 is absolutely not surprising. Expect bulls to regroup here. However should we see a slippage past 24740 again, the prospects of large fall will quickly rise, with 23860 as the first objective.Nifty Bank erased all its gains during the week. What are your targets for the holiday-shortened week ahead?
The rebound observed on Monday showed early promise but gradually lost steam as the week progressed. On Friday, the index ended the week with a bearish Marubozu candle, closing below the crucial rising trendline support at 55,232—a technically significant development. From a derivatives standpoint, while 41% of stocks witnessed short covering over the week, the sentiment turned cautious on Friday. Specifically, 33% of stocks saw fresh short positions, and 44% experienced long unwinding, indicating a weakening near-term outlook. A closer look reveals that the bulk of the unwinding was concentrated in PSU banking stocks. Additionally, 25% of Bank Nifty constituents saw short build-up in their near-the-money call options, further reinforcing the bearish undertone.
On the stock-specific front, major banking names such as HDFC Bank, SBI, Kotak Bank, and Axis Bank have either broken below their 14-day RSI average or breached key rising trendline supports—both of which suggest potential for further downside. However, ICICI Bank stands out as a relatively stronger component and may offer some support to the index if broader weakness persists. Looking ahead, if the index fails to sustain above 55,100, we could see it drift lower towards 54,900 and 54,650 in the coming week.
Ever since Sebi’s Jane Street order came out, the market has seen some impact on F&O volumes, particularly on expiry days. Once BSE and NSE expiry day swap comes into effect from September, what do you think could be the impact on volumes?
Sensex’s volumes usually peak significantly on the expiry day with OI peaking the day before. This trend could continue, as unlike Nifty which is preferred for positional trades and event set ups, Sensex is usually preferred for its lower lot size and higher volatility. If this remains true, the swap in expiry days may not have an impact on Sensex’s volumes. For Nifty, both Friday and Monday will see traders grappling with weekend uncertainty and news flow respectively.
And how would your Nifty trading strategy shift once we have Tuesday expiries? Do you think that the first few weeks of the shift could be stressful for traders?
For monthly expiries, single stock options will have more theta impact coming into play due to weekend falling shortly before expiry. Previously Mondays used to see expansion in premia with more days to expiry allowing traders to be more risk on with naked longs, but with Tuesday expiry, one might wait for Wednesdays to initiate such positioning.
Ola shares were among the top gainers last week. Do you think the momentum will sustain now?
The turn lower from the 55 is a classic rejection trade, with its inability to clear recent peaks. The slippage thereof has pierced 50% of Wednesday’s bull candle, adding more weight to the view that there is not enough case to retain upside expectation, especially with weak momentum indicators. For those looking for fresh entry may look for extended dips to 44.4 or direct rise above 55 to initiate longs.
Give us your top ideas for the week ahead.
Engineers India (CMP – 191.5)
View – Buy
Target – 208
SL – 184
The stock has been in a steady downtrend since July but now appears to be attempting a base formation around the 61.8% Fibonacci retracement level near 190. Technical indicators are beginning to favor a potential reversal. The 14-day RSI is hovering close to 30, suggesting oversold conditions, while the MACD is on the verge of crossing above its signal line, indicating a possible shift in momentum.
On the weekly chart, the formation of an inverted hammer candle adds further weight to the reversal argument. If this setup holds, the stock could move towards the 208 level in the coming weeks. To manage risk, long positions may be safeguarded with a stop-loss placed just below 184.
DCB Bank (CMP – 122)
View – Buy
Target – 134
SL – 114.5
After a steady decline since July, the stock appears to have found support around the 61.8% Fibonacci retracement level, drawn from the March 2025 low to the July high. This zone is acting as a potential base for a reversal.
Momentum indicators are beginning to align with this view. The 14-day RSI is recovering from oversold territory, while the MACD is on the verge of crossing above its signal line, both suggesting a shift in sentiment. Adding to the positive setup, the weekly chart has printed an inverted pinbar Doji near the same Fibonacci level, reinforcing the possibility of a near-term bounce.
If the current structure holds, the stock could move towards the 134 level in the near term. However, to manage downside risk, long positions should be protected with a stop-loss placed below 114.5.
