Indian Stock Market Forecast for Next Week | Nifty & BankNifty Options Strategies

Hey Traders!

I hope you're all doing well and staying safe. Here we come again with this weekly newsletter where I share my analysis for the coming week based on the chart and option chain analysis.

I also share some weekly options strategies in nifty and BankNifty for the coming week. Above all this, I also share some advice based on my knowledge and experience that can help you to make a better trader.

So read the post till last to know the important levels, weekly strategies, their adjustments and of course some advice that will help in your trading journey.

So let's dive in...

How to deal with this highly fluctuating market?

It's been 8 years since I met my mentor and learned option hedging strategies from him. The journey has been a rollercoaster with many ups and downs, but success lies in perseverance. I’ve made mistakes, learned from them, and never repeated them. But why am I telling you this?

Yesterday, I met a guy who was very depressed due to continuous losses in option trading because of the highly fluctuating market we see nowadays. He lost a significant portion of his capital and was planning to quit. We talked for almost 2 hours, and luckily, I identified 2 problems and shared solutions based on my experience.

The First Problem: Sticking to Old Strategies

He had been following the same strategies for the last 8 months, thinking the market would become less volatile and his strategies would start working again.

You know that in the last few months, volatility was high due to the general election. Many people thought that once the event was over, we’d see some cooling in the VIX, but the high fluctuations have been killing their expectations, resulting in higher losses compared to that known event.

The market is always changing. The sooner you can adapt to that change, the sooner you can protect your capital. When the market changes, we have two options: complain or adjust and optimize our strategies based on the current market conditions.

I prefer the second option because what worked in the past will not work in the current scenario, and what works now will not work in the future. That's why it's crucial to monitor the market closely and optimize our strategies accordingly.

The Second Problem: Over-Reliance on Backtesting

He was backtesting strategies and deploying them based on the results. There's no harm in backtesting; in fact, it gives us the confidence to run the cycle without doubting our system.

However, if you think that just backtesting strategies based on past performance and automating them through some algo tool is enough to generate consistent returns, you may be mistaken.

So, what’s the solution?

If you are or want to be a full-time trader, you can't completely depend on automation. To create a successful trading strategy, you first need to understand market behaviour.

Follow the market closely, create a strategy based on the current market scenario, and then backtest it. This approach will give you a more stable strategy compared to one based solely on historical data.

Treat backtesting or algo tools as your helping hand to execute your strategy more easily. That’s why I don’t follow a strategy blindly. Even if today is a profitable day and my strategies worked as expected, I prefer to check whether it synced with the market behavior. If not, I optimize it.

When you keep following the market, you start to understand its behavior and can take manual trades that increase your profit and confidence. I’ve applied the same approach in my intraday option selling and buying strategies.

You can check my premium strategies here: TradePik's Premium Strategies

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If you need any help or have any queries or feedback, type in the comment box and I will love to answer all your questions.

Indian Stock Market Prediction for Next Week

In this section, we analyse the chart of Nifty and BankNifty and try to find the trend and important levels for the coming week.

If we talk about Open Interest VS Price Action, I keep more focus on Open Interest. Reasons can be many but I have written a detailed post where I have mentioned 3 reasons.

• You can check here: 3 Reasons why Open Interest is more important than Price Action.

Nifty Prediction for next week with option selling strategies

Week starts on a positive note and we saw a good buying throughout the week ending on June 28, 2024. That indicates a positive sentiment in the market.

If you look at the chart, you will find that after the election result, we have seen a sharp upside rally. Although Nifty faced some resistance near 23500, but that was a halt to gain some strength for the upcoming rally.

And same you can see this week. Every day Nifty made a new high with a high momentum.

However, if you look at the stock-wise performance, Stocks are trading flats. Midcap & SmallCap indexes are UP by just 0.50% whereas Nifty is UP by more than 2%.

So what we can expect now?

I suggest, If you are already holding a long position, keep it on hold with a trail stoploss. But for new positions, let it retrace back to 23500.

The overall trend looks bullish, so no need to take any contra trade here.

Again if you look at the chart, You will find that Nifty is trading near an important level i.e. 24000. If it manages to sustain above 24000, we may expect 24500 in the coming sessions.

For the short term or the coming week, We may expect 23500 - 24500 is the range. While 24000 is acting as a crucial level. Breakout or Breakdown will decide further levels. So keep it on radar.

I will update you if there is some changes in the plan through my this blog. You can sign up FREE to get important updates directly into your email.

Nifty Prediction for next week based on OI data

Based on option chain data, the highest Open interest stands at 24500 CE & 24000 PE, followed by 24200 CE & 23800 PE. PCR of all strikes is 0.87, which indicates a neutral market. PCR at 23800 stands at 3.76, which is acting as an immediate support level.

The Put-call ratio at 24300 stands at 0.18, which is acting as a resistance level. Equally, an important indicator: Option Pain is at 24000, indicating a weekly expiry of around 24000. A shift in option pain will provide further levels of expiry. So keep tracking max pain.

Significant open interest buildup on both sides. Indicating that Nifty is facing good pressure from both sides and expecting to be in a range only. So based on the OI, the strong range for this week should be 23500 - 24500.

Keep tracking changes in open interest to analyze market participant’s behavior, so that you can adjust your position accordingly. If you don’t know how to analyze open interest for nifty and bank nifty option selling strategies. Just enrol for our Option Strategies – A Mentorship Program 3.0 (Recorded Version).

Nifty Weekly option Strategy

This week, we have created a strategy in BankNifty only.

Because Nifty was not giving proper risk:reward. We will also initiate a few monthly income strategies in stocks. So keeping focus only on BankNifty this week. Please find BankNifty strategy in the bottom.

If you want to learn these Nifty and BankNifty option selling strategies and their adjustments in more practical ways with live mentorship, You can enrol in our Option Strategies – A Mentorship Program 3.0 (Recorded Version)

BankNifty Prediction for next week with option selling strategies

BankNifty is also following the same setup that Nifty is showing. After a good rally, trading near its important level i.e. 52700.

If BankNifty manage to sustain above this level, then we may see 54600 in the coming sessions.

If it fails then we may treat it as a resistance and BankNifty will fall in the range of 51350 - 52700.

Overall trend looks strong for the coming week in BankNifty. Any closing below 52700 will halt this rally. So for the coming week, we can follow this 51350 - 54600 as the broad range.

I follow Open Interest data with PCR reading to find the range and breakout levels. You too can follow it to make better decisions.

Want to learn how to generate a consistent return with Option selling strategies? Enroll in our Mentorship Program 3.0 (Recorded Version) with a discount this week.

BankNifty Prediction for next week based on OI data

Based on Bank nifty option chain data, the highest Open interest stands at 53000 CE & PE, followed by 54000 CE & 52000 PE. PCR of all strikes is 0.81, which indicates a neutral market. PCR at 52500 stands at 2.63, which is acting as an immediate support level.

The Put-call ratio at 53500 stands at 0.1, which is acting as a resistance level. Equally, an important indicator, Option Pain is at 53000, indicating a weekly expiry of around 53000. A shift in option pain will provide further levels.

If you don’t know how to Predict BankNifty for next week based on OI data, Just enrol for our Option Strategies – A Mentorship Program 3.0 (Recorded Version).

Bank Nifty weekly expiry Strategy: Mouse Ear Iron Condor

Possible adjustments for this BankNifty weekly strategy:

Initially, you can keep a stop loss of 52000 & 54000 for this strategy. Means square off if you find nifty is giving a breakout or breakdown. Or you can make this adjustment too. ( Do not hold this strategy if the loss is more than 6000₹ per lot).

If you find that BankNifty is giving a breakdown and sustaining below 52000, then square off the call spread and bring it down to 1000 points lower levels.

The same thing you can do with put spread means if you got a breakout from 54000. You can shift your put spread to 1000 points up.

Important thing: It's a high-risk strategy and you have to follow it very closely. You should avoid it if you can't track the market closely.

If you want to learn these Nifty and BankNifty option selling strategies and their adjustments in more practical ways with live mentorship, You can enrol in our Option Strategies – A Mentorship Program 3.0 (Recorded Version)

Post your comments in the comment box if you have a query related to this Indian stock market prediction for the coming week You can ask any question related to options trading in the comment box.

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DISCLAIMER: – we are not a SEBI research analyst. Views posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline to interpreting specified analysis methods. This information should only be used by investors and traders who are aware of the risk inherent in securities trading.