In the previous note, it was mentioned that so long as the NIFTY stays above the 17500-mark, it is likely to stay inherently buoyant. The Indian equity markets saw a positive start to the day again, got stronger, and ended near its high point once again. Following a positive start to the day, the NIFTY slipped in the first hour of the trade in the negative territory to mark the low point of the session. However, this was short-lived, the Index recovered again to trade in the green. The NIFTY traded sideways until the late afternoon session while maintaining its gains. It was the last hour and a half of the session which saw the markets getting stronger. The NIFTY marked a fresh high; it finally ended the day with a net gain of 179.55 points (+1.02%).
We head into the penultimate day of the weekly options expiry. The options data show heavy Call unwinding at 17500 indicating that this level will be held on easy until the expiry. Furthermore, 17600 and 17700 saw heavy Put writing being done. This shows that market participants see little possibility of the NIFTY slipping below 17700; this strike saw maximum Put writing of 3.3 million shares. On the other hand, 18000 levels continue to hold the highest Call OI concentration for this week’s expiry. All in all, the options data tells us that upsides may be capped near 18000 levels if the buoyancy persists; downsides, on the other hand, may stay limited in their extent.
Markets will have overnight cues to deal with as the US markets open after holidays. Wednesday is likely to see the levels of 17865 and 17940 acting as resistance points. The supports come in at 17745 and 17650 levels.
The Relative Strength Index (RSI) on the daily chart is 63.25; it stays neutral and does not show any divergence against the price The daily MACD is bullish and trades above the signal line. A white body emerged on the candles; it continued to show a directional consensus of the market participants on the upside.
As mentioned in the previous note, there was no sectoral dominance seen; also, the financials relatively outperformed on the expected lines. The coming session is likely to see the markets attempting to extend their up move. However, in the event of any consolidation happening, it is likely to remain largely range-bound. We reiterate that given the strong undercurrents, creating shorts must be strictly avoided. Even if the markets take some breather and consolidate, all downsides must be used to make select purchases. While continuing to remain highly selective in picking stocks, protection of profits at higher levels 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)
