By Sameet Chavan
Our markets started yesterday’s session with a massive bump up beyond 16750 on the back of cheerful mood across the globe. However, this seemed overreaction as markets immediately came back to the realistic levels in the initial trade around 16650 in line with what SGX Nifty was indicating. This was followed by consolidation throughout the first half; but as we stepped into the latter half, the profit booking took place to some extent. Nifty 50 index came off sharply to test the 16450 mark in a span of merely half an hour. Fortunately, nerves settled down around it and with the help of a modest recovery at the end, Nifty concluded with weekly expiry tad below 16600 by adding over one and half a percent gain.
It was certainly an action-packed day for our markets and although, market erased a significant portion of its morning losses during the day, we must construe this as a normal course of action. Because we already had a sharp recovery of 1000 points from Tuesday’s low in merely two days and hence some sort of profit booking was evident after nearing crucial resistances. In fact, with reference to previous commentary, Nifty precisely faced resistance around the mentioned level of 16750. Going ahead, we expect some consolidation in key indices and lot of adjustment would continue to happen in individual stocks. As far as levels are concerned, 16700 – 16750 remains to be a key hurdle and any sustainable move above this would confirm Tuesday’s low as a bottom (last three day’s sharp up move has already given early indication of it). On the flipside, 16450 followed by 16200 are to be seen as immediate supports.
Since the current situation is connected to a war kind of scenario, we are waiting for further confirmation beyond certain levels but practically, we have already changed our stance in the last couple of sessions. For the coming session, in case of index consolidation, one should focus on stock specific moves, which are likely to continue and can provide excellent trading opportunities.
We saw short covering in both Nifty as well as Bank Nifty in the last session. An action-packed session was seen amid the weekly expiry. On the options front, we have observed OTM put strikes of 16500 and 16000 attracting traders’ attention. The highest open interest concentration for the new weekly expiry stands at 16000 PE and 17000 CE options. However, all eyes would be on 16500 followed by 16200 put strikes, whereas, on the flip side, 16700 and 16800 are to be watched closely. Meanwhile, India VIX, the volatility index, is also gradually cooling off, though still at high levels. Yesterday’s closing has seen a strong short covering as the index settled on a strong note.
(Sameet Chavan is a Chief Analyst-Technical and Derivatives at Angel One. Views expressed are the author’s own. Please consult your financial advisor before investing.)
