Last weekly expiry concluded on an extremely negative note, but fortunately, the pessimism didn’t last too long. Since last Friday, we have been witnessing boredom in our markets as the benchmark index is clearly stuck in a range of 11800-12000.
Last week, Nifty gave a sharp recovery from the 20-DMA and follow-up buying continued for the next two sessions to march towards the sturdy wall of 12,000. However, the index failed to sustain at the higher levels which was then followed by yet another round of profit-booking from June 11 high. We did see a V-shaped recovery to reclaim 11,900 on June 13; but, on the next day, follow-up buying was again missing and hence, we concluded the week tad below 11,850.
The banking index continued its consolidation for the third consecutive week and the open interest activity in futures segment also remained subdued. It has been observed that Bank Nifty has been finding support around 30,500-30,600 for last two weeks.
Now, one needs to wait for the follow-up activity before initiating any directional positions as we have concluded the week near the above-mentioned support zone. For the coming weekly series, 30,500 on the lower side and 31,500 on the higher side are attracting traders’ attention.
During the week, we hardly saw any fresh build-up in Nifty as well as Bank Nifty futures. In fact, even stronger hands hardly added fresh positions in index and stock futures segment. They preferred lightening their existing positions in this consolidation phase. However, they bought both index Call and Put options in this period.
As far as the activity in the cash segment is concerned, we witnessed a decent selling figure of Rs 996 crore last week. For Nifty options, a decent amount of writing was visible in ATM Puts at every decline that provided support to the market. For the coming weekly series, the maximum open interest concentration is seen at 11,800 Put and 12,000 Call. The fear index declined from 15.50 to 13.89. The falling India VIX is certainly a sign of strength for the market.
To conclude, the week gone by has left us with no major evidence in F&O space. At this point in time, 11,800-11,850 remains an immediate base for the Nifty; whereas, resistance is placed around the psychological mark of 12,000.
At this point in time, we would advise waiting for the follow-up development in the coming weeks. However, we have witnessed decent activity in individual counters; especially in the Metal counters that have been showing some respite after quite some time. Considering the long formation seen in this space, we expect further upside going ahead.
The author is Derivatives Analyst at Angel Broking Limited.
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