V-shaped recovery from 20-DMA, except rally beyond 12000: Angel Broking

Derivatives view by Ms. Sneha Seth (Derivatives Analyst, Angel Broking):

"Last weekly expiry concluded on 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 Friday, index gave a sharp recovery from the 20 DMA and follow-up buying continued for next two sessions to march towards the sturdy wall of 12000. However, index failed to sustain at the higher levels which was then followed by yet another round of profit-booking from Tuesday's high. Today, for the major part of the day, we had a rub off effect of last couple of day's selling and in this process, went on to almost test the 11800 mark. But once again the 20 DMA acted as a sheet anchor which eventually resulted into a v-shaped recovery to reclaim 11900 on a closing basis.

The banking index continued its consolidation for the third consecutive week and the open interest activity in futures segment remained subdued. It has been observed that BANKNIFTY has been finding support around 30600-30700 since last two weeks. Today, once again we saw demand picking up at these zones to conclude at a kissing distance from 31000. For the coming weekly series, 30500 on the lower side and 31500 on the higher side are attracting traders' attention.

During the week, we hardly saw any fresh build-up in Nifty as well as BankNifty futures. In fact, stronger hands too hardly added fresh positions in index and stock futures segment. They preferred lightening their existing positions in this consolidation phrase. However, they bought both index call and put options in this period. As far as the activity in the cash segment is concerned, we witnessing a decent selling figure of Rs. 1217 crores in last five sessions. In Nifty options front, decent amount of writing was visible in ATM puts in every decline which provided support to the market. For the coming weekly series, the maximum open interest concentration is seen in 11800 put and 12000 call. The fear index declined from 15.50 to 13.66, the falling INDIAVIX is certainly a sign of strength for the market.

To conclude, the weekly expiry gone by has left us with no major evidence in F&O space. At this point in time, 11800-11850 remains an immediate base for the Nifty; whereas, resistance is placed around the psychological mark of 12000. However, considering the recovery seen in today's session, we soon expect Nifty extending its upmove beyond 12000 in the coming week. Hence, traders are advised using declines to add-on fresh long. We have been observing that the Metal counters have been showing some respite after quite some time. Considering the long formation seen in the few individual counters we expect further upside in this space going ahead."

Source : Equity Bulls

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