The markets continued to gain momentum for the fourth consecutive week where the Nifty index surpassed the psychological barrier of 13,000 and hits fresh highs.
The rollover of Nifty and Bank Nifty stood at 78.68 percent and 79.35 percent, respectively, which is slightly higher than its previous three months average of 75.59 percent and 77.33 percent respectively. The overall data indicated that the long positions have been rolled in the December series and some more steam left on the upside. The Bank Nifty index may continue to outperform in the December series as well.
In index futures, FIIs have been a buyer of over Rs 5,000 crore throughout the series and in cash segment, they have a mammoth buying figure of over Rs 70,000 crore which is something extraordinary. Thus it seems that the bias continues to stay positive for the December series.
Technically, the Nifty index formed a Doji candlestick pattern on the weekly scale which indicates indecisiveness amongst participants. Hence, for any fresh momentum on the higher side, the Nifty index has to take out the high of a Doji candle which is placed at 13,145 levels. On the downside, the immediate support is placed at 12,700 levels and only a breach below the same would bring bears into action.
The volatility index 'IndiaVIX' is hovering near 20 levels and it is still very much in the comfort zone. It is likely to remain in the range of 16-26, hence bulls are likely to have the upper hand in the market.
The overall focus has now shifted towards broader markets which outperformed this week and technically it is looking strong for the December month. Hence, we advised traders to focus on stock-specific action from midcap and smallcap space.
On the derivative front, a fresh Put writing was seen at 12,800 and 12,900 strikes where the highest open interest is placed at 12,900 strike, which is likely to act as immediate support in the coming week followed by 12,800.
On the call side, a huge addition was seen at 13,000 and 13,100 strikes on Friday, where the maximum open interest is placed at 13,000 strikes of more than 32 lakh contracts. So, in the coming week if Nifty breaks above 13,000 levels decisively then we can expect a short-covering move towards 13,200 and 13,300 levels. So the overall option data indicates a broader range of 12,800 – 13,300 for the coming week.
The BankNifty index traded in line with the Nifty index and formed a similar Doji candle on the weekly scale. It faced stiff resistance around 30,200 levels and witnessed profit booking from the same.
It is also making higher highs and higher low formation on the weekly scale from the past four weeks, which means the previous low of 28,850 will now act as immediate support.
Now, a decisive move beyond 30,200 levels will provide further momentum towards 30,600-30,800 levels. Overall, we can expect BankNifty to oscillate in a broader range of 28,850-30,800 in the coming week.
Technically, a positive setup was seen in Adani Ports, Bata India, Grasim Industries, Hero MotoCorp, Max Financial Services, Manappuram Finance, SAIL and Tata Consumer Products.
(Nilesh Ramesh Jain, Senior Technical and Derivatives Analyst - Equity Research at Anand Rathi Shares and Stock Brokers.)Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.