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F&O outlook: Nifty support at 17500 intact, Bank Nifty resistance at 39800-40000; avoid aggressive bets

As far as Bank Nifty is concerned, it has now surpassed 39500 on a closing basis but we still do not want to get carried away

F&O outlook: Nifty support at 17500 intact, Bank Nifty resistance at 39800-40000; avoid aggressive bets
FIIs were net sellers in the cash market segment to the tune of Rs. 2290 crores. Image: Pixabay

By Sameet Chavan

On the technical perspective, the crucial support of the 17500 was firmly safeguarded, implying the resilience of the technical support. Though some tentativeness was seen in our domestic market during the weekly expiry session, any sign of respite from the global bourses could trigger strong momentum from hereon. In terms of technical levels, any breach below the mentioned support could drag the market towards the 17350 zone, which is likely to be seen as the sheet anchor. At the same time, on the higher end, the 17700-17750 could be seen as immediate resistance, followed by the 17850-17900 zone.

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We saw a complete roller coaster today in key indices and in the midst of all this, the Bank Nifty appeared slightly stronger. Going ahead, we continue to see a decent demand zone around 39000-38800; whereas on the flipside, a cluster of resistances are visible at 39600-39800-40000. Traders are advised to take a directional call only outside this range; until then exiting as close as resistance levels and vice versa should be the apt strategy.

As far as Bank Nifty is concerned, it has now surpassed 39500 on a closing basis but we still do not want to get carried away. Because from here on the moves are not going to be as smooth as it has been over the past 3 weeks. We advise traders to stay light at higher levels and be prepared for volatile swings on both sides. As far as levels are concerned, 39800-40000 to be seen as immediate resistances, whereas on the flipside, 39300-39000 to be treated as intraday supports.

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FIIs were net sellers in the cash market segment to the tune of Rs. 2290 crores. Simultaneously, in Index futures, they sold worth Rs. 4189 crores with an increase in open interest, indicating short formation. Yesterday, we observed fresh short formation in Nifty, whereas long unwinding took place in banking index. Stronger hands too turned net sellers not only in equities but also in index and stock futures segment. We observed a huge pile up of positions in 17550-17650 call strikes, which we believe are shorts. On the contrary, put writers covered their shorts in ATM as well as OTM strikes, which is certainly not an encouraging sign for the market.

We would advocate avoiding aggressive overnight bets for the time being and keeping a close tab on global developments. Meanwhile, identifying the thematic movers should be the key to better trading opportunities in the current market condition.

(Sameet Chavan is the Chief Analyst-Technical and Derivatives at Angel Broking. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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