F&O expiry outlook 11 Nov: Nifty may face strong resistance around 18000, charts suggest turbulence ahead

November 08, 2021 9:09 AM

Traders are advised not to carry aggressive bets on the long side as long as we remain below 18000 – 18100 on a closing basis.

Nifty, NSE, stock marketIn F&O space, we saw some open interest reduction in the Nifty; whereas, no relevant change was observed in the banking index. Image: Reuters

By Sameet Chavan

We inaugurated the festive week on a cheerful note on Monday and witnessed some hiccups in the initial two hours of trade. As we progressed, the buying interest emerged to slowly and steadily move beyond 17950. On the following day, we again started positively but failed to sustain at higher levels after retesting the psychological barrier of 18000. After undergoing a small correction on Tuesday, the subsequent session started positively and Nifty made one more attempt towards 18000. Once again we witnessed some nervousness at higher levels as the selling augmented in the latter half to pull the Nifty back to 17800.

Since it was a truncated week on the back of the Diwali festival, markets remained more or less in a range of merely 300 points, where both the support and resistance range played out accurately. Historically it’s observed that markets do not correct during the Diwali week and this is what we witnessed in the last three sessions. But we must accept the fact; markets were a bit tentative in the last couple of sessions. Since there was no major action in the week gone by, our overall view remains the same as we had mentioned in our previous commentary.

We continue to remain cautious on the market because of few technical developments, they are as follows: 1) the ‘Lower Top Lower Bottom’ on daily chart got confirmed last Friday after breaking below 18000. 2) this coincided with the violation of the key short term moving average of ’20-day EMA’, which is now acting as a sturdy wall. 3) More importantly, if we take a glance at the monthly chart, we can see a formation of ‘Shooting Star’ pattern, which certainly does not bode well for the bulls.

Traders are advised not to carry aggressive bets on the long side as long as we remain below 18000 – 18100 on a closing basis. On the flip side, we may see this corrective move extending towards 17450 first and if things worsened then the possibility of sliding towards 17200 – 17000 cannot be ruled out. The coming week would be quite crucial for the market as it may dictate the near-term direction.

In the F&O space, we saw some open interest reduction in the Nifty; whereas, no relevant change was observed in the banking index. 18000 call options added a good amount of build-up; suggesting the market to face strong resistance around this zone. On the other hand, some build-up was seen in the 17800 put strike. Throughout the week, we hardly saw any relevant development in the derivatives segment. Hence, we would stick to the view of staying light in index and opt for stock-specific trades.

(Sameet Chavan is Chief Analyst – Technical and Derivatives, Angel One Limited. Views expressed are the author’s own.)

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