By Ruchit Jain
Post last week’s expiry, we witnessed some volatility the previous Friday due to negative news flows in the Oil & Gas sector resulting in a sharp correction in the index heavyweights such as Reliance and ONGC which dragged the Nifty towards 15500. However, we did not witness any short formations in the index and infact, the Bank Nifty index relatively outperformed and lifted the markets higher. Post that recovery, stock markets gained strength gradually which was mainly due to a combination of short-covering and fresh long formations in Nifty. The Bank Nifty index witnessed fresh long formations leading to relative outperformance during the week.
On the flip side, the retail clients continue to have bullish positions majorly with 6 per cent of positions in the index futures on the short side. In the options segment, the call writers had to cover their positions in the week gone by which indicates weakening resistance.
For the coming weekly series, the 16000 and 15900 put options have witnessed open interest addition indicating that the support base has shifted higher and hence, any decline towards this support is likely to witness buying interest. On the flipside, 16200 is the immediate hurdle as per the options data and if the index manages to close above that, then we could see further momentum towards 16400-16500. The support for the Bank Nifty index is placed around 34500-34400 while the index could attempt to rally towards 35400.
Amongst the stock-specific movement, heavyweights from the banking space witnessed long formations while stocks from capital goods too have seen long build-up. The IT giant TCS will be declaring quarterly results which would set the near-term trend for the IT stocks. The Metal stocks have seen aggressive shorts in last couple of months which were rolled and hence, there are short positions intact. On Thursday, certain stocks saw positive momentum towards the end and have breached their immediate resistance which could lead to short covering in the metal stocks. Traders are advised to trade with a positive bias for the coming week and look for buying opportunities on any in-between declines.
(Ruchit Jain is the Lead Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)