By Sameet Chavan
The US Fed chairman did not shock the markets this time as they announced a rate hike of 75 bps which was very much in line with expectations. In fact, the dovish commentary lifted the overall sentiments in US markets, which had a favorable rub off effect in our markets at the opening yesterday. We started the session with a decent bump up above the 16750 mark, which kept on accelerating as the day progressed. Eventually, the benchmark index Nifty managed to close at 3-month high by adding more than 1.70% to the previous close.
Our market had shown a glimpse of some strength during Wednesday’s session and with global market boost, we managed to extend the move beyond the 16900 mark. With yesterday’s strong rally, 17000 is very much in sight now which is also closer to the ‘200-SMA’ level of 17030. Most likely, we would see index hastening towards this junction in the coming session as well and then we’ll have to see whether market participants opt to take some money there or they continue to move towards 17200 and then 17380 – 17450.
In our sense, the bias remains strongly bullish and any decline towards 16830 – 16750 should be used to go long. However, having said that, it’s advisable not to get too complacent at this juncture and hence, one needs to follow one step at a time strategy.
Looking at the F&O data, we have witnessed short covering in both indices on the expiry day. Rollover for Nifty stood at 76%; which is higher than previous series and in case of banking index it’s slightly lower at 82%. In Nifty options, the concentration of OI is seen at the 16800-16700 put strikes, which is likely to be seen as immediate support. On the flipside, 17000 call writers will be at risk once Nifty stays beyond it, which will trigger further move in the market.
Apart from this, we witnessed a good broad-based participation in the last couple of days and hence, one should keep focusing on such potential candidates who are likely to outperform the key indices going forward. Sectorally, we expect CAPITAL GOODS to continue its strong run. In addition, IT stocks are likely to see strong relief moves in the coming series and needless to say, banking stocks have gained some traction, which bodes well for the bulls.
(Sameet Chavan is a Chief Analyst-Technical and Derivatives at Angel One. Views expressed are the author’s own. Please consult your financial advisor before investing.)