By Sameet Chavan
The cues from the US bourses yesterday morning were neutral to slightly on the positive side. Despite this, our markets had a weak opening and as the day progressed, we kept on shrinking like a slow poison. Fortunately, we witnessed some buying interest at lower levels and saw some recovery as we stepped into the last hour of the trade. With some wild swings at the end, Nifty concluded the session with over six tenths of a percent loss.
Yesterday’s price action was slightly weird in our sense; because Dow Futures were trading firmly in the green and meanwhile, our markets continuously displayed lack of strength. Fortunately, with the help of some recovery in the latter half, we managed to defend the 17000 mark on a closing basis. Taking a glance at the price action, we can see Nifty making identical lows since last three sessions. This makes 16950 as a key level for today’s trading session. Any sustainable move below this intraday support would lead to further weakness towards 16800 – 16750.
Also Read: Nifty may head towards 17600 in near term; look for contra buying opportunities at 16750 level to pocket gains
As of now, we do not expect the possibility of this scenario, rather we remain hopeful of some sustainable relief rally in the US markets. This will trigger a strong up move in our markets towards 17200 – 17250 levels. In fact, if the market has to regain real strength, it needs to surpass 17250 with some authority. Let’s hope for the best as we are now placed at an interesting juncture.
As far as Bank Nifty is concerned, it seems to be clearly trapped within a range and in the last four sessions have moved in a sequence of one blue candle followed by a red candle. Now it would be interesting to see how markets trade on the final day of the week. Immediate support is seen at 38400 below which 38000 can be tested which is the 89EMA. On the flip side, 39200 followed by 39600 would be the key resistance. Considering the placement of key indicators, we remain hopeful for the bulls but one should ideally avoid aggressive bets and keep an eye on global development as well.
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FIIs were net sellers in the cash market segment to the tune of Rs. 1636 crores. Simultaneously, in Index futures, they sold worth Rs. 558 crores with an increase in open interest, indicating short formation. As key indices slipped lower, we witnessed short formations in Nifty whereas long unwinding was seen in Bank Nifty. Strong Hands were sellers in both cash and in Index future. The ‘Long Short Ratio’ remains unmoved at 19%. The PCR-OI of Nifty has also slipped to 0.75 indicating oversold markets. For the fresh weekly series, a pile-up of positions is seen at the 17000 strike of both call and put indicating traders are expecting a trending move post the recent consolidation phase.
(Sameet Chavan is the Chief Analyst-Technical and Derivatives at Angel One. Views expressed are the author’s own.)
