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F&O Manual: Traders expect some gains as day progresses

Global markets declined after the US Federal Reserve raised interest rates by 25 basis points, even as banking sector concerns weigh heavy

March 23, 2023 / 11:12 IST

The market was subdued on Monday 23 morning on weak global cues after the US Federal Reserve raised interest rates by 25 basis points, refusing to back down in the face of red-hot inflation but it did hint that the rate-hiking cycle may be nearing the end.

Despite the tepid start, traders were hopeful of the market extending gains as the day progressed.

At 10.27 am, the benchmark Nifty was up 1.80 points, or 0.01 percent, at 17,153.70, while Nifty futures were up 12.15 points or 0.1 percent at 17,197.15.

Among put options, maximum accumulation of writers was seen at 17,000, as the psychological important levels acting as immediate support for the index.

Heavy call writing was seen at 17,200, as traders believe the level could act as an immediate resistance. Most traders were of the opinion that short-covering could only be triggered after the Nifty decisively moves past 17,200.

1

Santosh Pasi, professional trader and founder of Pasi Technologies, expects the market to make modest gains towards 17,220. As momentum still remains weak, Pasi advised investors to apply a short-strangle strategy by writing put options of 17,100 and call options of 17,250.

While financials supported the gains, heavyweight Reliance Industries and other information technology counters saw selling pressure. A similar mixed trend was also seen in the F&O segment, where long additions were seen in banks, automobiles, chemicals and power, while IT, capital goods and FMCG were seeing a short buildup.

2

Vedanta witnessed a sharp rise in short positions as open interest in the counter shot up 16 percent, the highest in the quarter. The jump in open interest also corresponded with a fall in the stock price in the cash market, that slipped below the 20-day simple moving average. A short buildup is a bearish sign which happens when prices fall along with a rise in open interest.

Other counters to see short buildup included Hindustan Aeronautics, Berger Paints, Persistent Systems and Vodafone Idea.

An addition of long positions was seen in IndiGo operator Interglobe Aviation as open interest in the stock rose, while prices moved above the 200-day exponential moving average.

Tata Motors, Maruti Suzuki, and M&M Financial Services also saw a long buildup, which is a bullish phenomenon characterised by rising prices along with an increase in open interest.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Vaibhavi Ranjan
first published: Mar 23, 2023 11:06 am

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