Markets near days high; Put addition in Nifty 14,500-14,600 strikes

Updates: The trading session is just into its initial stage, but the Indian markets have already witnessed a roller coaster ride as Nifty witnessed a movement of 180 points. After opening gap-up within a blink of an eye, markets were considerably off highs to enter into negative terrain. Fortunately, the fall arrested around the 20-hourly moving average and Nifty is back near its day’s high.  

The advance-decline ratio is quite strong, and all the sectoral indices were trading in green with Nifty Metal and Nifty Pharma being the top gainers.   

On the Options’ front, the Put addition is seen in Nifty on 14,500 PE and 14,600 PE by 9.4 lakhs and 9.65 lakhs, respectively. 

It has become a new norm for the index to start the proceedings for the week with a gap. In the last week, Nifty started with a gap-up and the proceedings for this week started with a gap down.

After opening lower, the index fell like a pack of cards in the first half of Monday’s session. At one point in time, the index slipped below the important psychological mark of 14,500. However, it staged a small recovery from the lower levels in the second half of the trading session to eventually close at 14,638. Meanwhile, India VIX shot up 6 per cent at 21.22.   

The price action of the day formed a sizeable bearish candle with a lower shadow, and this specifies a sharp sell-off in the first half of the trading session and the emergence of buying from the lower levels. Nifty filled the gap, which was created last week on March 30 and interestingly, the index managed to defend the low of March 30 on a closing basis. 

With this sharp fall on Monday, the index again slipped below the 20 and 50-DMA and currently, Nifty is seen trading 1.02 per cent below the 50-DMA and 1.13 per cent below the 20-DMA. The 50-DMA has flattened, and the 20-DMA is trending down; however, this should not have much impact as long as Nifty is stuck in a range as we had mentioned in our previous note that during a sideways, price action criss-crosses around the crucial moving averages.  

Now, going ahead, the low of 14,459.50 is likely to act as immediate support and a move below this level could lead to a test of 14,264.40 on Nifty. On the upside, the level of 14,885 is likely to act as a stiff resistance and as long as the index is unable to cross this level, expect the index to stay in the broad range of 14,260-14,880.