By Sameet Chavan
We started the inaugural week of the September series with an upside gap on Monday, tad above 16750 and as we progressed, fresh purchasing kept pushing the benchmark index towards 16950. This wouldn’t have been feasible without having the specular move in the banking index which lastly managed to surpass the sturdy wall of 36200-36300 on a closing basis on the identical day. On the subsequent day, the momentum extended additional to attain and at some point surpassed the milestone of 17000. The impetus was so robust that we could hardly see any intraday dip to present a fresh purchasing chance for traders. The Nifty rallied to nearly touch 17200 on the identical day but the adhere to-up purchasing was missing in the banking index.
The day ahead of weekly expiry, we had a cheerful start out and the benchmark index clocked fresh record highs of 17225.75 in the early morning trade but sadly failed to sustain at greater levels. This profit booking move not only wiped-off all the intraday gains but also dragged the index in the unfavorable territory to at some point conclude the day beneath 17100. The Bank Nifty showed some outperformance in the initial hour of trade to nearly touch the 37000 mark but due to decent profit booking there also it at some point concluded the day with gains of merely fourth tenth of a %. However on the weekly expiry day, Nifty shrugged off this mild negativity and had a steady move to close at new highs.
Now let’s take a speedy glance at the F&O activity. On the net basis, the majority of the positions formed in initial trading sessions have been on the extended side. Stronger hands also participated by adding longs in equities and stock futures on the other hand, their positions in index futures remained mixed. It would be intriguing to see Thursday’s figures as nicely. As far as Option information is concerned, we can see maximum open interest in 17000 puts followed by 17200 and 17100 strikes whereas on the greater side, there are no important positions prior to 17500 get in touch with choices.
Nifty has been enjoying a robust Bull run due to the fact the last 16 – 17 months and in the last handful of weeks also, it gave some mesmerizing moves. Although the current momentum has been really robust, we can see some intense levels in the benchmark index now. If we take a broader view, we can see the Nifty reaching the 200% ‘Fibonacci Retracement’ of last year’s huge decline from Jan’20 higher to March’20 low. Also timewise, Nifty has entered 7th zone as per ‘Fibonacci Time Series’ on the month-to-month time frame chart. We do not want to sound pessimistic but due to the fact a couple of essential essential ratios are coinciding at present levels, becoming also complacent is not a smart ploy. To be on the safer side, we advise traders to maintain booking income in the rally and steer clear of taking aggressive longs for a whilst. Yes, momentum traders can nevertheless continue with their stock precise trades but requirements to adhere to strict cease losses and booking timely profit is advocated.
(Sameet Chavan is Chief Analyst – Technical and Derivatives, Angel Broking. Views expressed are the author’s personal.)