The trading session on the weekly options expiry day happened much on the expected lines. The NIFTY stayed in a capped range but also spent the entire day oscillating back and forth with a positive undercurrent. After a positive start to the day, the NIFTY saw some corrective pressure, which in a way, was not unexpected given the kind of moves it had seen over the past two days. The markets slipped in the negative and remained in the negative territory until the afternoon when it crawled back in the green. After that, the NIFTY spent the remaining session while maintaining modest gains. The headline index finally ended the day with a net gain of 47.10 points (+0.27%).
The expiry went off on expected lines. The Call OI that was maximum at 17600 strikes saw the NIFTY not moving past that point. In the same breath, maximum Put OI climbed higher to 17500 levels which helped NIFTY protect this point. Going by the F&O data, the undercurrent remains buoyant. Apart from minor deliberations which may be range-bound, by and large, the markets are likely to trade with a positive bias. The levels of 17600 may pose minor resistance; once taken out, it may see the NIFTY moving higher.
Volatility eased a bit; INDIAVIX came off by 3.84% to 16.6025. Friday is likely to see the levels 17580 and 17630 acting as resistance points. The supports come in at 17445 and 17365 levels.
The Relative Strength Index (RSI) on the daily chart is 50.34; it has marked a new 14-period high which is bullish. It stays neutral and does not show any divergence against the price. The daily MACD is bullish following a bullish crossover; it now trades above the signal line. A Doji and a candle with a long lower shadow occurred. Usually, such formations may lead to consolidation; however, we will need confirmation on the next bar.
The pattern analysis shows that the NIFTY achieved the price measurement obligations following a breakdown from a bearish Head and Shoulders formation. After this, it formed a base and has reversed from there.
All in all, looking at the NIFTY futures data also hints at an underlying strength in the markets. The NIFTY December future has added over 2.80 lakh shares or 2.53% in the Net Open Interest. The addition in OI has come with the rise in the markets; this indicates buildup of fresh long positions. Given the present technical setup, even some minor profit taking or broad consolidation happens, creating shorts must be avoided. While using dips to pick select stocks, a cautiously positive outlook is advised for the day.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
