Nifty near days high: 15,800 PE witnesses aggressive addition of OI; Bank Nifty joins party as well!

Market Update at 01:22 PM: Indian markets have recovered from the lower levels and were seen trading near the day’s high despite the fact that US Dow Jones Futures is trading with modest losses. Nifty is trading above the 15,850 mark while Sensex is hovering near the 53,000 mark.   

Among the sectoral indices, Nifty IT & Nifty Pharma emerged as the top gainers while on the other hand, Nifty Realty is witnessing profit booking.   

On the options' front, the 15,800 Put option has seen aggressive addition in the open interest (OI) as on Wednesday itself, over 53 lakh shares have been added in the open interest. 

Market Update at 10:29 AM: After opening with a negative bias, the Indian benchmark indices have slipped lower and were seen trading with a modest loss of 0.16 per cent. Nifty is trading below the 15,800 mark while Sensex slipped below the 52,700 mark. Nearly 30 stocks of Nifty 50 were seen trading in the red.   

Nifty IT has provided much-needed support to the markets on a day when global cues are fragile. Interestingly, four out of the top five contributors are from the IT sector. Infosys, TCS, HCL Tech & Tech Mahindra have combinedly contributed 27 points to Nifty’s kitty. While on the other hand, prior day’s star performers such as HDFC twins, ICICI Bank and Reliance Industries are seen dragging the index lower.

On Tuesday, Nifty staged a smart comeback to close above the 15,800 levels, courtesy banking heavyweights and Reliance Industries as nearly 84 points were combinedly contributed by ICICI Bank, HDFC twins & Reliance Industries. Nifty gained about 120 points, and it settled at 15,812.35. Bank Nifty rallied by 1.35 per cent while Nifty Financial Services jumped by 1.48 per cent. Smallcap-100 index also gained 1.03 per cent. Nifty IT and FMCG indices declined 0.32 per cent and 0.18 per cent, respectively. All the other sectoral indices gained by an average of half a per cent.  

The price action of the day had formed a small-bodied bullish candle with a long lower shadow.   

In the first half of the trading session, Nifty traded within the high-low of its first-hour range and by the end of the session, buying interest was witnessed that helped the index to close near the day’s high. Nifty reclaimed its 20-DMA while the cash segment volume was higher as compared to its previous day’s volume.   

Going ahead, it’s crucial for the index to protect the 20-DMA and as long as the index protects its 20-DMA, it’s likely to revisit the upper band of the range, which is placed around the 15,900-15,915 zones. The index in the last one month had tested this zone multiple times. Historically, the repeated testing of supports and resistances beyond six times is very rare in any timeframe. If such a situation occurs, then the only way by which this resistance or support is crossed is through a gap!  

So, a gap-up opening above the level of 15,900-15,915 would help the bulls to gain momentum.   

Market participants will closely watch the results of IT bellwether – Infosys, which is expected to announce its earnings today.