F&O Manual | Momentum remains strong as Nifty heads towards 21,500

The Nifty 50 has surged 18.5 percent in 2023 so far.

The benchmark indices extended gains on December 26 from the previous session. The domestic market also mirrored the upbeat trend seen across most Asian peers, which also lifted sentiment for the local equities. The market breadth also tilted in favour of gainers as they outnumbered laggards in trade today.

Around noon, the Sensex was up 308.85 points or 0.43 percent at 71,415.81, and the Nifty was up 111.90 points or 0.52 percent at 21,461.30. About 2,084 shares rose, 1,220 fell, while 123 were unchanged.

The bars in green represent the change in the put open interest (OI) and the red the change in OI for call options.

Put writers were active across 21,450 strike, followed by 21,400 and 21,350 strikes, which hint at limited downside for the benchmark Nifty 50. On the upside, call writing was seen at 21,500 and 21,550 strikes, suggesting some resistance coming in from these levels.

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"Going ahead, a strong buying momentum is likely to lift the Nifty 50 towards 19,500. In case of profit-booking, the index is expected to draw immediate support from levels around 21,350," said Omkar Patil, technical and derivatives analyst at Ashika Stock Broking (Institutional Research).

Despite a positive undertone, analysts at Angel One advised investors to remain vigilant as they anticipate volatility at higher levels.

As for individual stocks, Aarti Industries, NMDC, Tata Chemicals, Bharat Electronics, and Laurus Labs witnessed heavy addition of long positions, which is a bullish sign. On the other hand, Manappuram Finance, PVR-Inox, and Vodafone Idea saw a buildup of short positions which hint at a possibility of further pressure on these stocks.

Some covering of short positions was also seen in Hindustan Copper and LIC Housing Finance.

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