HomeFinanceNifty shorts still intact, continue to sell on rise till index breaches...

Nifty shorts still intact, continue to sell on rise till index breaches 17900-18000 range

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By Sameet Chavan

Market had a positive start yesterday despite mixed global cues. In the initial trades, it looked a bit tentative as there was some hangover left of previous day’s late correction. Fortunately, all these nerves settled down in the first half an hour and then it was all big boy RELIANCE’s show thereafter. The stock kept surging throughout the day to mark whopping gains over 6% percent. It is needless to mention when this heavyweight moves in this fashion, it certainly takes the benchmark alongside it. If we look at the contributors list, this stock single-handedly pushed Nifty beyond 17500 as it contributed 104 points in Nifty.

The November series ended with slightly less than a couple of per cent, which clearly ended its recent winning streak. Also the last couple of weeks have been difficult for the markets overall as they certainly went under the hammer. After Monday’s brutal knock, the Nifty seems to have slipped into a consolidation mode. The immediate range would be 17600 to 17200; where 17200 becomes sacrosanct support and on the flipside, 17600–17700 is to be seen as a sturdy wall. We continue to remain on the bearish side and expect the current recovery to get sold into. Hence, traders are advised to start lightening up longs if Nifty enters the mentioned resistance zone. For the coming day, 17400 – 17300 are to be seen as immediate supports. We reiterate that till the time we do not surpass 17900 – 18000, one should continue with a sell on rise strategy. Sooner or later it is likely to breach the key support of 17200 to slide below the 17000 mark.

Market seems to have reversed precisely from the important resistance levels, be it Nifty and Bank Nifty or even the midcap index for that matter. Traders are advised not to get carried away by in between recoveries and should avoid taking aggressive longs for a while.

In November series, we witnessed majority of short formation in both the indices and these positions have been rolled over too. Rollover for Nifty and BankNifty stood at 82.56% and 83.76% respectively. Surprisingly, stronger hands halted selling in index futures and opted to add some longs in recent correction and have rollover these longs in the next series. This has resulted, Long Short Ratio surging from 54% to 70% now. However, they remained net sellers in equities for the November month. Considering the rollover data, we believe most of the shorts are still intact and until we don’t see a sustainable move beyond 17800.

(Sameet Chavan is a Chief Analyst – Technical & Derivatives at Angel One. Views expressed are the author’s own. Please consult your financial advisor before investing)

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