Nifty continues to face selling pressure - ICICIdirect

After remaining range bound in the initial part of the week, the Nifty continued to face selling pressure where midcap stocks once again faced the brunt. Apart from Friday's trade, the Midcap index remained negative and shed another 2.5% during the week. Among heavyweights, auto and energy stocks were the major laggards while HDFC Bank and TCS provided a cushion to the broader index.

In the Nifty options space, Call option writers were active on ATM 5900 and 6000 strikes indicating prevailing weakness in the market. In the last week, Call 5900 strike added more than 2.2 million shares along with addition of 1.8 million shares at Call 6000 strike. However, Put option open interest remained almost unchanged at 5800 and 5900 strikes on a weekly basis.

India VIX sustained itself above 100 DMA levels last week and remained almost flat at 15.25 levels. Continuous elevated levels of India VIX may continue to exert pressure on the broader indices. However, a round of short covering cannot be ruled out if India VIX comes below 14.9 level on a closing basis.

Nifty: The Nifty has immediate resistance placed at 5940 levels. Inability to close above 5940, may induce profit booking towards 5840/5800. Short covering is expected only above 5940 towards 6000 levels.

Bank Nifty: Despite prevailing weakness in the broader market, the Bank Nifty did not breach its previous week lows of 12245. A move below these levels may trigger closure of positions towards 12000. On the higher side, 12500 will remain a crucial resistance for the banking index.

Sectorally, auto and media stocks observed addition of fresh short positions last week. On the other hand, realty and technology stocks observed noteworthy closure of positions during the last week.

Source : Equity Bulls

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