By Sameet Chavan
Wednesday’s dramatic session was followed by a pleasant start yesterday morning. Within a few minutes of trade, Nifty moved towards 18100 and meanwhile the banking index just hastened to register a new high of 41840.15. It looked as if we were going to have a great weekly expiry yesterday. But as mostly market surprises every now and then, we witnessed a sharp profit booking thereafter to not only pare down gains but also slipped well inside the negative territory. With some volatile swings in the latter half, the Nifty eventually concluded the weekly expiry with a cut of seven tenths of a percent, tad below the 17900 mark.
Yesterday’s profit booking in Bank Nifty was no surprise to us; but the way it closed at the lowest point of the day was a bit unexpected. This price development should be construed as merely a profit booking in key indices. But the next couple of sessions would be quite important in order to maintain the recent positivity. As far as Nifty is concerned, Wednesday’s low of 17770 would be seen as a pivotal point and till the time, we are able to defend it, there is no reason to worry for. On the flipside, 17950 followed by 18100 are to be considered as immediate hurdles.
FIIs were net sellers in the cash market segment to the tune of Rs. 1270 crore. Simultaneously, in Index futures, they sold worth Rs 944 crore with a mere increase in open interest, indicating short formation. Looking at the overall F&O data, we have witnessed long unwinding in Bank Nifty and some short addition in the Nifty. On the options front, the piling up of positions is visible in the 17800 put strike, followed by 17600 PE. While on the higher end, the 18000-18100 call strikes have a decent piling in the OI concentration, indicating an immediate resistance. Meanwhile, the stronger hands have contracted their ‘Long Short Ratio’, which plunged to 24% from 28%.
As of now, we continue to remain upbeat and expect the market to resume its upward trend, if there is no aberration on the global front. Meanwhile, Midcaps continue to buck the trend and hence its advisable to keep focusing on such ideas.
(Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One. Views expressed are the author’s own.)