AgenciesSell 27th April Nifty future at 17650-17670 & Buy 27th April 17650 Call at 70-75, Target: 17500-17400, Time Frame: till expiry.
Rationale
The Nifty experienced some selling pressure at higher levels and lost more than 1% last week after sharp up move of nearly 1,000 points seen in the first half of the series. Broader markets have relatively outperformed as heavily beaten down stocks from the midcap and smallcap segments witnessed fresh buying ahead of the quarterly results. Going ahead, we expect the current consolidation to continue and a move beyond 17700 or dips towards 17,500 can be utilised for creating long positions.
From a data perspective, the VWAP of the series is placed at 17650 strike along with aggressive Call writing at 17,700 Call strike making these levels important hurdle. On the other hand, the Put base at 17700 strike is also strengthening suggesting limited declines. Hence from monthly expiry perspective, we believe only a sustain move above these levels may trigger fresh up move.
The open interest in the Nifty futures has remained low and Nifty is starting the settlement week with near 9.3 million shares which is significantly low suggesting no major directional bias prevailing in the market.
As we are keeping our view moderate bearish hence we advise traders to go for short protective future, where the maximum loss for the trade would be |3760. While strategy will be in profit if the expiry comes below 17575 levels, or it move towards 17500 levels before the expiry.
(The author, Raj Deepak Singh, is Analyst – Commodity, Currency, & Derivatives, ICICIdirect)
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