The Bank Nifty is finally out of the slumber phase and the way it’s shaped up, it should ideally lead the benchmarks to new highs
By Sameet Chavan
After an extended weekend, markets opened on a flat note on Monday and then we witnessed some profit booking in the early morning trade to drag the benchmark index below the 17300 mark. However, Nifty managed to recoup a major portion of losses to reclaim 17350 on a closing basis. On the subsequent day, we had a gap-up opening and then Nifty went on to mark fresh record highs in the initial hour of trade. Unfortunately, in absence of a follow-up buying, index consolidated thereafter to conclude the session tad below 17400. During the remaining couple of sessions, the Nifty resumed its upward trajectory but this time it was with immense buying momentum to reach new milestones. The weekly expiry panned out with decent gains over six-tenths of a percent to register new highs beyond 17600.
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For the last few days, Nifty was trapped in a small range and finally, it managed to find some momentum. The trend is extremely strong but honestly, the current move is not giving us comfort at all. We reiterate that when things start to look hunky-dory and there are no signs of correction, market surprises. Yes, it’s difficult to predict the precise time, but it’s always better safe than sorry. As of now, we are not advising to short but at least one can choose to keep booking profits on a regular interval and stay light on positions.
One can still continue with a stock-centric approach by following strict stop losses; because they are still providing better trading opportunities. Now as far as immediate levels are concerned, 17500 – 17450 – 17350 are to be seen as key supports. Since we are trading in uncharted territory, it’s difficult to project the upside levels and hence, just for understanding, every 100 points psychological level can be considered crucial points.
The banking index has had a lion’s share in the last two days’ rally as we saw Bank Nifty hastening towards its record highs on Thursday. The Bank Nifty is finally out of the slumber phase and the way it’s shaped up, it should ideally lead the benchmarks to new highs. But now going back to our recent stance, we would certainly be watchful of overall proceedings in the coming session. If we witness a sustainable breakout beyond 37800 – 38000, we would see continuation of this upward momentum in the banking space. However, if there is no follow up to Thursday’s spectacular move, the bulls would certainly be disappointed.
As far as Option data is concerned, we have been witnessing decent writing in 17400 – 17500 puts since the last couple of days and on Thursday it shifted to 17600 strike. On the flipside, all the money strike call writers ran for shelter as they got threatened by a good rally in the banking space.
(Sameet Chavan is Chief Analyst – Technical and Derivatives, Angel Broking. Views expressed are the author’s own.)