By Rajesh Palviya
On the daily chart the index has formed a bearish candle with a long upper shadow indicating selling pressure as well as resistance at higher levels. The index is moving in a Higher Top and Higher Bottom formation on the daily chart indicating a sustained up trend. The chart pattern suggests that if Nifty 50 crosses and sustains above 17900 level it would witness buying which would lead the index towards 18000-18100 levels. However, if the index breaks below 17700 level it would witness selling which would take the index towards 17600-17500. Nifty is trading above its 20 day SMA which indicates positive bias in the short term. Nifty continues to remain in an uptrend for the short term, so buying on dips continues to be our preferred strategy.
Nifty 50 Derivative Outlook:
In Nifty 50 current series there has been a Short Covering witnessed with increase in price of 1.84% and decrease in OI by 17% as of Wednesday, wherein there was unwinding of 21.26 lakh shares in OI, decreasing from 122.67 lakh to 101.41 lakh shares. Nifty current month rollover stands at 15.64% as on today, while Nifty Put Call Ratio, a sentiment indicator used by Traders to gauge the market sentiment and mood, is currently at 0.86 compared to 1.07 of last week, indicating flat-to-negative movement.
India Vix, a market volatility indicator often called the fear gauge, is currently trading 19.02% compared to 20.56% of last week.
Implied Volatility of Nifty ATM options for the current series is at 18.12% in contrast to 19.35% of last week, indicating Low Volatile movement on either sides in the expiry session.
Nifty Put options OI distribution shows that 17,500 has highest OI concentration followed by 17,800 & 17,600 which may act as support for current expiry and on the Call front 18,000 followed by 18,100 & 17,900 witnessed significant OI concentration and may act as resistance for current expiry.
In weekly options there was Call writing seen at 18,100 strike followed by 18,000 & 17,900 while on the Put side noticeable activity of writing was witnessed in 17,700 ,17,500 & 17,800 strike prices. Options data suggest an immediate trading range between 18,100 and 17,500 levels.
Nifty Open Interest Concentration
Nifty Option OI Change
Bank Nifty Outlook
On the daily chart the index has formed a bearish candle with a long upper shadow indicating selling pressure as well as resistance at higher levels. The index is moving in a Higher Top and Higher Bottom formation on the daily chart indicating a short term up trend. The chart pattern suggests that if Bank Nifty crosses and sustains above 37800 level it would witness buying which would lead the index towards 38000-38200 levels. However if index breaks below 37500 level it would witness selling which would take the index towards 37200-37000. Banknifty is trading above 20 day SMA’s indicating positive bias in the short to medium term. Bank Nifty continues to remain in an uptrend in the medium and long term, so buying on dips continues to be our preferred strategy.
The daily strength indicator RSI has turned positive and is above its reference line indicating sustained strength.
Bank Nifty Derivative Outlook
In current series there has been a Short Covering witnessed in Bank Nifty Fut with an increase in price of 3.28% and decrease in OI by -47 as on today wherein there was unwinding of 17.24 Lac shares in OI, decreasing from 37.06Lac to 19.82Lac shares. Bank Nifty Current series rollover stands at 17%, while Bank Nifty Put Call Ratio, a sentiment indicator used by Traders to gauge the market sentiment and mood, is currently at 0.79 compared to 0.90 of last week indicating Flat-to-Cautious bias.
Bank Nifty Put options OI distribution shows that 37,500 has highest OI concentration followed by 36,500 & 37,000 which may act as support for current expiry and on the Call front 38,000 followed by 38,600 & 38,500 witnessed significant OI concentration and may act as resistance.In WEEKLY options Call writing seen at 38,800, 38,600 & 38,500 strike while on the put side it was seen at 37,500 , 37,000 & 36,500 Options data indicated an immediate trading range between 37,000 and 38,000 levels.
Bank Nifty Open Interest Concentration
Bank Nifty Option OI Change
Nifty Strategy
The strategy which we are suggesting for this weekly expiry dated 13th April is a Moderately Bullish strategy called as CALL LADDER, which involves Buying of one lot of NIFTY 17,850 Call @ 158 & selling of one lot each of 18,000 Call @ 95 & one lot of 18,150 Call @ 54. The cost of the strategy involves outflow of Rs 450 which is the maximum loss if NIFTY trades & remains below 17,860 levels on expiry .The maximum profit of Rs 7,050 will be attained at 18,000 levels, while strategy will start making loss above 18,300, hence it’s advisable to exit the strategy in total to avoid UNLIMITED losses above 18,300. Break Even points of the strategy are 17,859 on Upside & 18,291 on the lower side.
(Rajesh Palviya, VP – Research (Head Technical & Derivatives), Axis Securities. Views expressed are the author’s own.)
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