Moving forward, Nifty has to hold above 11,820 levels to witness an upmove towards 12,100 while on the downside, key support exists at 11,777-11,750 zones.
Futures & Option Data: Nifty immediate range 11,700 to 12,100 (Nifty CMP – 11,930, Bank Nifty CMP – 24,478)
Nifty futures closed the week with gains of 1.44 percent with addiction in futures Open Interest (OI) by 7.31 percent on a weekly basis which indicates longs are being built up. During the week, Put Call Ratio (PCR) based on Open Interest of Nifty moved in between 1.35 and 1.61 levels and closed the week at 1.47. On option front, maximum Put open interest is at 10,500 followed by 11,500 strike, while maximum Call open interest is at 12,500 followed by 12,000 strike. We have seen Call writing at 12,500 then 12,000 strike while Put writing is at 11,800 then 11,900 strike. Option data suggests an immediate trading range in between 11,700 to 12,100 zones.
Bank Nifty futures closed the week with gains of 4.04 percent with addition in Open interest by 8.7 percent on a weekly basis which again suggests long built-up. Put Call Ratio based on Open Interest of Bank Nifty remained in between 0.86 and 1.29 and it closed the week at its lower band indicating grip of Call writers. IV of Banking index decreased to 33 levels as the week concluded. Maximum Put open interest is at 24,000 followed by 24,500, while maximum Call open interest is at 25,000 followed by 26,000. We have seen Call writing in 26,000 while Put writing is witnessed at 24,000.
Greed and Fear Indicator: VIX needs to cool down for market stability (VIX CMP – 21.82)
India VIX was up by 0.8 percent from 21.64 to 21.82 levels on a week-on-week basis. It negated its higher highs formation but has to further cool down below 20 levels for market stability and keeping in account spikes ahead of the US election.
Sector-wise breakup: Earnings season brought momentum in Realty and Metal stocks
Long built-up was seen in the Automobile, Banking, Cement, Finance, Infrastructure, Media, Metals, Realty, Technology and Telecom sector while Short built-up in Fertilisers, FMCG and Pharma sectors and Long liquidation in Textile along with Short covering in Capital goods, Oil & Gas, and Power stocks.
Fund Flow: FIIs continue buying
In the cash segment, FIIs were net buyers for the entire week and summed up to the tune of Rs 7,375 crore. DIIs on the other hand were net sellers throughout the week to the tune of Rs 7,800 crore. The Long Short Ratio ranged from 61.5 percent to 66.5 percent in the week to close the week at 61.5 percent. On the FIIs derivatives front, there was short built up in index futures and long liquidation in stock futures.
Moving forward, Nifty has to hold above 11,820 levels to witness an upmove towards 12,100 while on the downside key support exists at 11,777-11,750 zones. Overall price and data setup suggests bounce may be seen but multiple hurdle and supply pressure at higher zones could restrict its upside momentum with higher volatility. Bank Nifty has to hold above 24,250 levels to witness an upmove towards 24,750 then 25,000 while on the downside support exists at 24,000 then 23,750 levels.
(Chandan Taparia, Vice President – Research Derivatives & Technical Analyst at Motilal Oswal.)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.