Nifty trades near day's low; 17,300 CE options witness massive open interest addition!

Market Update at 11:12 AM: Nifty, after registering a fresh all-time high early in the day, has trimmed its gains and slipped into negative terrain. It had made a high of 17,311.95 levels early in the day and interestingly, the 17,300 Call option has seen maximum open interest build-up in today’s session. The 17,300 Call option has added more than 27 lakh shares in the open interest and with this, the total open interest in 17,300 calls stand in excess of 43 lakh.   

Among the sectoral indices, Nifty Media and Nifty Auto are seen leading from the front while on the flip side, Nifty Financial Services & Nifty Metal emerged as the top losers.   

The broader markets were seen outperforming the frontline indices with Nifty Midcap 100 and Smallcap 100 gaining 0.28 per cent and 0.36 per cent, respectively. 

The equity market bounced back after a day of breather. On Thursday, it gained almost one per cent and closed near its day’s high. Nifty settled at a record high of 17,234.15 with 157.90 points gain. Among the sectoral indices, barring Nifty Auto and PSU Banks, all other sectoral indices participated in the rally with Nifty IT and Nifty FMCG being the top gainers.   

The benchmark index scaled to new highs almost in all the last five trading sessions. With a small profit booking on Wednesday, the index closed in the negative territory; however, it maintained its rhythm of higher high. During the last five trading sessions, it gained 597.25 points or 3.59 per cent with the help of two massive days of a 200-point rally. It registered very strong gains in four out of five days. It formed another higher high & higher low bar on Thursday. This shows a strong uptrend.   

During this, Nifty has almost met our earlier target of 17,265. The leading indicator i.e., RSI has reached above 80, indicating that the index is extremely overbought. At the same time, the index is closing above the Bollinger upper band for the fourth consecutive session. It has to come into the bands in the next two to three sessions. The index is now 3.84 per cent above the 20-DMA, which further indicates that the index is a bit overstretched. After this whopping move, as a rule, it may enter into a consolidation. It does not mean that the market will correct significantly as there is no weakness in any time frame. Book the profits only if it closes below the prior bar low.