Nifty target for 2019 near 13,700 and support at 9,650

In the last seven years, the Nifty has given an average return of 20-25% from lows whenever India VIX has come off from 23-25% or 33% levels.

Jan 07, 2019 05:01 IST IIFL Derivative Desk Raushan Kumar |

Nifty 2019 Target at 13,700: How?
  • In the last three election years, the Nifty has always given strong returns, i.e., 2004: 11%, 2009: 76%, 2014: 31%. 
  • S&P to MSCI EM price ratio at Mean+2 implies that outperformance would be seen in EMs vs. S&P.  
  • In the last seven years, the Nifty has given an average return of 20-25% from lows whenever India VIX has come off from 23-25% or 33% levels.   
  • As per bell-shaped curve, Nifty 2019's projected target is at 13,700 (calculation given below)
 
Nifty Mean+2 Higher level of 2019
Buy 11,272.00
Trend Continues 11,525.00
Trend Continues 11,730.00
Possible Reversal Point 11,936.00
Possible Reversal Point 12,280.00
Trend Continues 12,405.00
Trend Continues 13,010.00
Max Intraday Target 13,673.00
 
Nifty 2019 Support at 9,650: How?
  • In case of a sell-off, the Nifty's value derived after deducting Mean+1 level from its heavyweights (80%)
 
Security Name Industry Weightage (%) CMP Major Supoort Impact on Nifty (Points )
HDFC Bank Ltd. BANKS 9.91 2,110 1,900 103
Reliance Industries Ltd. REFINERIES 8.78 1,090 980 110
Housing Development Finance Corporation Ltd. FINANCE - HOUSING 6.95 1,937 1,700 100
Infosys Ltd. COMPUTERS - SOFTWARE 6.3 668 580 100
I T C Ltd. CIGARETTES 5.8 279 240 90
ICICI Bank Ltd. BANKS 5.52 362 317 97
Tata Consultancy Services Ltd. COMPUTERS - SOFTWARE 5.02 1,900 1,700 80
Larsen & Toubro Ltd. ENGINEERING 3.87 1,400 1,170 90
Kotak Mahindra Bank Ltd. BANKS 3.61 1,233 1,010 80
Hindustan Unilever Ltd. DIVERSIFIED 2.8 1,785 1,580 37
Next 15 Stocks 22 173
Nifty 10,700 1,060
Major Support level         9,640
 
 
Remarks:
For reaching a Nifty target of 13,700, the best derivative strategy is "Synthetic Call" with LEAP option. Traders and investors are advised to use this complex option strategy after knowing their risks through a derivative expert only. Hedging any open positions against adverse market movements is a key aspect of risk management in derivatives.

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