NIFTY OUTLOOK & OPTION CALL PUT TIPS FOR 01 SEP 2022

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The Nifty saw volatile action on September 1st. The index had experienced a rapid upward movement in the previous session; However, there were no follow-up purchases today. Markets have traded volatile, losing over a percent and a half as weighed down by weak global markets. After the gap down start, the Nifty oscillated in the range and eventually settled at 17542. Most sectoral indices traded in tandem, but the broader rally kept participants on their toes. Benchmark indices closed lower with Nifty below 17,600, mainly dragged by IT, metals, energy and oil & gas stocks. In the end, the Sensex was up 770 points at 58766 and the Nifty was up 216 points at 17542. Throughout the day, the index oscillated around the major hourly moving averages and the 20 DMA. Finally, the daily chart's Nifty has formed an inside bar pattern. Nifty remained sideways throughout the day before ending 1% lower. After starting to slide lower on weak global cues, the Nifty failed to fully recover, trading within a range for the day. Markets remained volatile throughout the week as benchmarks simply followed weak global cues, falling over 1%. Gloomy manufacturing data in Europe and Asia weighed on sentiment and renewed fears of slowing global demand. Markets were unable to celebrate August's strong GST earnings as the Fed's dovish stance and the prospect of further rate hikes hurting future growth kept investors nervous. Markets are showing tremendous resilience amid weak global signals and the recent consolidation should be seen as a breather to digest gains. Therefore, we recommend continuing the buy-on-dips approach. Banks, financials and autos top our list of preferred sectors, while the underperformance of the IT package could continue to hurt. Participants should adjust their positions accordingly. The overall structure shows that the index has been in a short-term consolidation for the last few weeks and that this is likely to continue. 17300-17800 is the broad range for the short-term consolidation. The momentum indicator is in a bearish crossover, which suggests a bear market. On the downside, 17450 could continue to act as a crucial support, below which the index could weaken again. On the upper end, resistance is seen at 17750. Technically, 17400would be the key support level while 17700 could represent the immediate hurdle for the market. Below 17400 the Nifty could slide to 17300-17200. On the upside, new uptrend is possible only after breakout of 17700 range. Above that, the index could rise to 17800-18000.