NIFTY In­dex Chart Anal­y­sis

Nifty may see some short-cov­er­ing

Dalal Street Investment Journal - - TECHNICALS -

The Septem­ber de­riv­a­tives ex­piry went great guns for the In­dian mar­kets, where bench­mark indices bounced back ex­actly from their cru­cial sup­port lev­els. Nifty and Sen­sex took a U-turn from 9687 and 31081, re­spec­tively. The re­lease of macroe­co­nomic num­bers coun­ter­poised the pre­vail­ing geopo­lit­i­cal ten­sions and an­a­lysts mur­mur­ing ahead of the slow­down in the In­dian econ­omy. Mar­kets also over­came the sta­tus quo main­tained by the RBI mone­tary com­mit­tee at the pol­icy re­view. Oc­to­ber started off with ro­bust auto sales num­bers notwith­stand­ing the cess on fuel as well as the price hike in Septem­ber 2017. The core sec­tor growth hit­ting 5-month high lev­els and man­u­fac­tur­ing and ser­vices PMI de­pict­ing ex­pan­sion too buoyed the mar­kets into con­tin­u­ing on its up­ward baby steps. The re­cent up­side, with the Nifty hit­ting above the 10000-mark, was driven by stock-spe­cific an­nounce­ments in the front­lin­ers. Go­ing for­ward, the Septem­ber quar­ter cor­po­rate earn­ings re­port of ma­jor com­pa­nies would ma­jorly drive the mar­kets, kick­ing off the earn­ings sea­son with In­dusind Bank on Oc­to­ber 12. Seems Oc­to­ber heat is still on in the mar­kets!

The chief bench­mark in­dex Nifty took a ma­jor sup­port at the 9687 level and gave an ob­vi­ous bounce-back and surged al­most 3.5% from those lev­els, giv­ing con­sis­tent up­side with just a

sin­gle breather in-be­tween.

The ham­mer-like pat­tern with huge vol­umes along with the 14-pe­riod RSI re­ver­sal from near to the over­sold zone led to a re­ver­sal in the Nifty. Now, con­sid­er­ing the daily time frame, Nifty has sur­passed 61.8% re­trace­ment level of the prior sharp down­ward rally. Nifty has cre­ated a Doji pat­tern, the con­fir­ma­tion of which would lead to a retreat yet again. In that case, we hold 9950-9900 as im­me­di­ate sup­ports, fol­lowed by 9860. How­ever, if the slug­gish move just acts as a breather, we hold 10130 as the im­me­di­ate re­sis­tance if Nifty hits above 10063-10073 on a clos­ing ba­sis. Con­sid­er­ing the medium-term pic­ture, 10150-10300 would act as the re­sis­tance lev­els, while 9820 fol­lowed by 9685 will act as cru­cial sup­ports. Be­low 9685, Nifty would give pro­vi­sional trend re­ver­sal. Nifty (Oct) fu­tures closed at pre­mium of 18.75 points ver­sus a pre­mium of 27.80. On the op­tion front, max­i­mum Put Open In­ter­est (OI) is at 9,800 fol­lowed by , strike, while max­i­mum Call OI is in­tact at 10,000 fol­lowed by 10,100 strike. The im­plied volatil­ity of At The Money op­tions has de­creased from 10.06 to 9.60. Over­all fu­ture and op­tions vol­umes is cur­rently at 42.56 lakh con­tracts, with a turnover of Rs 3,65,727 crore. Con­sid­er­ing high­est OI for Oc­to­ber se­ries stand firm at 10,000 Call and 9,800 Put op­tions, mar­ket may con­tinue to trade in a range go­ing ahead.

Note: De­riv­a­tive data is based on Oc­to­ber 10, 2017.

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