F&O Manual: Traders continue with sell-on-rise strategy as trend remains negative

After a day of heavy buying, Dalal Street was back to its subdued ways, with Nifty opening lower on January 10. At 10.34 am, the index was down 128 points at 17,973, while Bank Nifty, too, slipped 460 points lower to 42,123.

Heavy call writing was seen at 18,000 and 18,100, as trader expectations shifted for the week. Some put writing was also seen at 18,000, making it a crucial level for both the bulls and the bears.

Traders maintained that this is a sell-on-rise market and the overall setup remains negative. Santosh Pasi, a registered financial adviser and trader, said, “Let the market go and sell it.” He is an algo trader with most strategies adjusted to this stance.

Traders and analysts have been advising to trade weekly options over monthly ones, as earnings season may induce volatility and you may see big losses.

Another trader also rued the volatility, saying it is difficult to make money in such a scenario. “If you don’t book profits, your position comes back to where it was,” he added.

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The sectoral trend was mixed. Auto, metals and power saw a long buildup, a bullish sign where prices and open interest rise in tandem, while banks, telecom and technology saw a short buildup, where open interest rose but prices fell.

Stock wise, there are some opportunities, said a trader.

Manish Shah, a technical analyst and a trader, said he bought Tata Steel at Rs 119 with an intraday target at Rs 121. He also said the setup is positive for SRS.

A short buildup was also seen in Intellect Design, TCS, PNB, City Union Bank, Infosys, Bharti Airtel and Persistent Systems. A long buildup was seen in Tata Motors, Hindustan Copper, Motherson Sumi, Indigo and National Aluminium.

Disclaimer: Trading in futures and options markets is extremely risky. Traders and experts mentioned above may not be SEBI registered. Hence, trades they have taken should not be construed as investment or trading advice. Please consult a financial adviser before taking any trades.