By Sameet Chavan

Previous week’s smart recovery was followed by a positive start on Monday. The Nifty 50 index managed to extend gains towards 16900 on the same day itself. However, due to some nervousness at higher levels, markets witnessed a sharp profit booking on the subsequent day to snap all gains. Fortunately, it was merely a reality check which didn’t last too long. In fact, the geopolitical concerns with respect to Russia and Ukraine started to fade away, which uplifted the overall sentiments. Due to two back-to-back bump up sessions, Nifty eventually went on to close convincingly beyond 17000 as the bulls pocketed almost 4% gains this week.

But in our sense, the index may not have the similar sort of swift move that we witnessed in the last 5-6 trading sessions. We may see some consolidation or in between small bout of profit booking in the forthcoming week.

However, we strongly believe that the stock specific adjustments are likely to continue and hence the pragmatic approach would be to keep focusing on thematic plays and importantly identifying the potential movers within the same is the key. Also, the banking index plays a vital role going ahead as its approaching its crucial juncture of 36700 – 37000. Let’s see how this high beta index behaves in the first half of the week. Since the Russia-Ukraine war is yet to completely come to an end, it would be important to keep a regular tab of this development as well.

Taking a glance at the F&O data, we observed mixed activity during the week. On a net basis, open interest reduction was observed in both the indices. Surprisingly, stronger hands turned net buyers in equities (in the last two trading sessions) after quite some time. They also exited shorts and added bullish bets in index as well as stock futures. In the options segment, the pile up is clearly visible in 17000 – 17300 Put strikes, which is again an encouraging sign. Considering recent development, we remain upbeat on the market and expect follow-up moves towards 17400 – 17500.

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

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