Nifty likely to face resistance around 17500, deploy bearish put spread: Santosh Meena

The Nifty50 is showing the first sign of reversal and the correction could be meaningful this time where 17250-17150 is an immediate demand zone as 20-DMA is currently placed at the 17156-mark, and below this, there is a risk of Nifty moving below 17,000-mark, where 16,700 will be the next important support.

India VIX is reversing with a breakout of falling wedge formation where 18.5 is 200-DMA. Above this, we can expect a sharp surge towards the 24-mark, therefore we will have a sell-on-rise strategy, where 17, 500 will act as an immediate and strong resistance to take fresh short positions. If Nifty manages to sustain above the 17,550-mark, then the bearish view will be challenged.

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Conservative traders can go with bearish put spread, where they have to buy Nifty 23-Sep 17500PE which is currently trading around Rs 201 and Short 23-Sep 17200PE, which is currently trading around 68.5 where maximum risk will be 132.5 points and maximum profit will be 167.5 points.

Bank Nifty is facing resistance at the psychological mark where it is likely to test its 20-DMA which is currently placed around the 36500-mark.

On the upside, 37500 will be an immediate hurdle. One can buy Bank Nifty 37000PE, which is currently trading around 270 level where 500 will be the target and 140 will be the stop loss.

In terms of individual counters, RBL is looking weak because it is in a downtrend, where it is again facing selling pressure at its 20-DMA therefore it may resume its downtrend.

Traders can look for its 175PE, which is currently trading around Rs 7.25 where Rs 4.9 would be stop loss and Rs12 will be the target.

By Santosh Meena (The author is Head of Research, Swastika Investmart Ltd)

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)