Nifty may see correction, place stop loss below 17900; immediate resistance at 18200 | The Financial Express

Nifty may see correction, place stop loss below 17900; immediate resistance at 18200

17900-18000 would be seen as key support range for the near term and if this support is breached, then we could see unwinding of positions which could then lead to a short-term corrective phase,

Nifty may see correction, place stop loss below 17900; immediate resistance at 18200
18200 is the immediate resistance which if surpassed, could then result in a continuation of the momentum towards 18400-18500

By Ruchit Jain

Nifty started the November series on an optimistic note as traders unwound their short positions and rolled over long positions. From the recent swing lows, Nifty has rallied around 1000 points in the last one month and is now hovering around 18000 level and looking for global cues for the next directional move. On the weekly expiry day (3rd November), our markets once again relatively outperformed the global markets as the US markets corrected post the FED policy outcome, but our indices recovered from the lows post the gap-down opening. However, it mainly seems because option writers had formed aggressive positions in the 18000 put option and the banking space rallied which led to close above 18000 in Nifty.

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The move going ahead could depend more on the global move where the Nasdaq index seems to have resumed its corrective phase again. If we look at FIIs data, they started the series on a positive note and formed long positions in the initial couple of sessions which led to 65 percent of their index futures positions on the long side. But in the last couple of sessions, they have trimmed their longs and their ‘Long Short Ratio’ have reduced to 59 percent. Now although they are still net long, a fall in the above ratio indicates unwinding of long positions by them. The Clients section too is trading with net long positions at 57 percent.

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In the options segment, the coming week data hints that open interest is scattered in call options in 18100-18500 strikes, but on the put side, there’s decent open interest build up at 18000 strike. Going by the data, it seems that 17900-18000 would be seen as key support range for the near term and if this support is breached, then we could see unwinding of positions which could then lead to a short-term corrective phase in index up to 17600-17500. Thus, traders should watch out for this support and place stoploss on existing long positions below the same. On the flipside, 18200 is the immediate resistance which if surpassed, could then result in a continuation of the momentum towards 18400-18500.

(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)

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First published on: 04-11-2022 at 09:48 IST