The bulls regained control after pausing in the previous week where the Nifty index surpassed the psychological barrier of 14,000 and hits fresh new highs.
Now, ahead of the budget, we can expect a further upside rally on the back of a pre-budget rally in the January series. The overall structure of the Nifty index hints at a further upside towards 14,200-14300 levels in the coming week. On the downside, the immediate support is placed at 13,800 levels and only a breach below the same would bring bears into action.
The volatility index 'IndiaVIX' is hovering below 20 levels and it is very much in the comfort zone. The overall range of 15-25 is still intact and bulls are likely to have an upper hand in the market.
The broader markets have outperformed and also hinting at a fresh positive momentum on the higher side. Thus, a defensive trader needs to focus on stock-specific action from the midcap and smallcap space.
On the derivative front, a huge amount of Put writing was seen at 14,000 strike on Friday which now holds the highest open interest of 25.2 lakh contracts. The base is continuously shifting higher and the 14,000 levels will now act as immediate support in the coming week.
On the Call side, a fresh addition was seen at 14,200 and 14,300 strikes where nearly 13 lakh contracts were added in both the strikes. The maximum open interest of 27.8 lakh contracts is placed at 14,000 strike and we haven't seen any unwinding, which indicates a tug of war between 14,000 Call and Put writers. Hence, in the coming week if Nifty sustains above 14,000 then we can expect some short-covering move towards 14,200 and 14,300 levels. Based on the data we can expect Nifty to oscillate in the range of 13,800 – 14,300 in the coming week.
As expected, the BankNifty index outperformed compared to the Nifty index and formed a bullish candle on the weekly scale. It also surpassed its major hurdle of 31,000 on the closing basis which will now act as immediate support followed by 30,400. Now, as long as it holds above 31,000 levels we can expect further momentum to continue towards 31,500-31,800 levels.
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