By Ravi Singh
The Nifty opened this week with a rebound from its support with an open interest (OI) addition of 3.7%. Gross Domestic Product (GDP) growth subsided to a seven-quarter low at 5.4%. A key event to watch out for this week is the RBI Monetary Policy, which is scheduled on Friday. The current market outlook for the Nifty suggests that it remains in a “Sell on Rise” mode, indicating that any upward movements are likely to be met with selling pressure. A decisive close above 24600 would indicate a positive momentum in the market. As of now, the highest OI on Nifty December monthly options is concentrated at the 24000 PE and 25,000 CE strikes. Specifically, the 24000 PE has an open interest of approximately 5.7 million contracts, while the 25000 CE shows around 4.6 million contracts. In terms of market flows in November month, FII have been net sellers and disposed more than 46000 cr whereas, DII have been net buyers of a total of 42700 crore.
The Bank Nifty index experienced a rebound with an OI addition of 3.6%. On the downside, the 51800 level will act as an immediate support. A breach below this level could trigger a decline towards 51000. From a derivatives perspective, notable call writing activity is observed at 53000 call strikes, which have the highest open interest on the December monthly expiry.
Key levels to watch:
For the Nifty, as long as the index trades below the 24,600 – 24,700 range on a spot basis, the bias remains “Sell on Rise” for the weekly expiry of the December series. We expect significant resistance in the 24,600-24,700 zone, while immediate support is likely around the 24,000 – 23850 levels. Consequently, the trading range for Nifty during the December series is expected to be between 24000 and 25000.
For Bank nifty immediate support is likely around the 51,800 – 51,600 mark while 53,000 – 53,200 would act like an immediate hurdle. We anticipate the index to trade in a broader range of 51,600-53,500 range during the December series.
Strategy for the week: Nifty Short Strangle
Sell Nifty Put 24000 @ 32
Sell Nifty Call 24800 @ 18
Spread 50 Stoploss 88 target 2 (Expiry December 05)
(Disclaimer: Ravi Singh is the Senior Vice President of Retail Research at Religare Broking Limited. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)