By Sameet Chavan
Markets had a positive start out on Monday and without the need of wasting a great deal time, Nifty continued with its streak of attaining new milestones. During the initially couple of sessions, Nifty clocked back to back fresh highs beyond 17400 but failed to close beyond it on each the occasions. In the latter half, we saw some hint of profit booking but mighty bulls came back strongly not only to defend essential supports but also to lift the benchmark index beyond 17350 comfortably to mark the highest ever weekly close.
The cost action in essential indices this week was incredibly dull as we witnessed one of the thinnest weekly trading ranges for a extended time now. Although Nifty looked a bit uncomfortable about 17400 all through this week, we did not see any big weakness general. The moment it falls by almost a %, the getting tends to occur quickly. As of now, clearly bulls are possessing a firm grip on the marketplace but as we have been mentioning for a week or so, they would discover it a bit challenging now going ahead.
We reiterate our observations for becoming slightly cautious at existing levels. They are, 1) we can see Nifty reaching the 200% ‘Fibonacci Retracement’ of the last year’s enormous decline from Jan’20 higher to March’20 low, 2) Time-smart, Nifty has entered 7th zone as per ‘Fibonacci Time Series’ on the month-to-month time frame chart.
It may perhaps look a bit contradictory to adopt a cautious stance when the marketplace is generating new highs practically just about every day. But these described proof have proved their efficacy in the previous and therefore can not be overlooked. So let’s see how factors shape up going ahead. As far as levels are concerned, 17450 – 17500 would now be seen as a sturdy wall whereas on the flipside, the initially sign of weakness would come only just after confirming a single day close under the assistance zone of 17300 – 17250. We advise traders to continue with a stock centric strategy by following strict quit losses and booking timely profit is also extremely encouraged.
As far as F&O activity is concerned, the index ended the week on a robust foot about 17370 but no big modify in open interest was seen in indices. FIIs unwound some of their longs in the index futures and their ‘Long Short Ratio’ is above 63 %. There was no fresh create up in indices this week but we think the prior longs in Nifty are nonetheless intact. In the nearby strikes, 17400 get in touch with and 17300 place has highest open interest.
(Sameet Chavan is Chief Analyst – Technical and Derivatives, Angel Broking. Views expressed are the author’s personal.)