By Anand James
Violent swings marked the closing hours of final week, in keeping with the drama prevailing all by the week. But it additionally lent an excellent poise, giving all sorts of merchants one thing to sit up for within the coming week. Put choices had been added essentially the most to 14000 strike, which can also be what charts are pointing for the medium time period. However, we imagine {that a} brief time period bounce is due. OI in NSE Nifty 50 is the very best at 15000 and 16000, which is comparatively a muted vary, when put within the backdrop of final week’s plunge. The skew of PE in the direction of ATM, hints at a bearish exhaustion. Long places of earlier days have been liquidated, however sensible cash has moved to brief PEs at 14500 and 15000. Calls had been brief essentially the most 16300, 16000 and 15700, in that order, however that is largely a premium scalping strategy, given VIX at comparatively low stage, when in comparison with earlier peaks this 12 months.
India VIX’s constructive divergence is likely one of the elements supporting an increase early this week. However, lack of main rise in India VIX doesn’t, in its isolation, recommend an entire reversal in development. It may simply be that the current information movement holds no shock potential to the market and will nonetheless permit for continued decline within the medium time period.
However, in the meantime, it may give a wriggling room for a aid rally. FII longs in index futures have remained underneath 15%, which is a historic low. This can’t be dismissed as a scarcity of exercise by FIIs within the phase, as their shorts are on the highest since 2020. While FIIs’ document 2.11 lakh crore promoting of Indian equities that has endured over eight months may be construed as borne out of want for money, being starved elsewhere, the large index future shorts that they’ve been sitting on, and proceed to carry, recommend that they’ve been equally bearish on Indian equities. While this additionally units up circumstances for brief protecting rallies, we really feel that its prospects look restricted for now.
With this in perspective, we see sustainable rallies solely above as soon as above 15850, however see potential for upswings early within the week, which in flip are more likely to face challenges within the 15530-600 area initially.
(Anand James, Chief Market Strategist at Geojit Financial Services. Views expressed are the writer’s personal.)
Source: www.financialexpress.com”