Bears fumble; bulls may score as F&O data indicates advantage to bulls
Tuesday’s trading session almost looked like a replica of Monday. As in both the trading sessions, Nifty witnessed a gap-up opening, and thereafter, it extended its gains in the initial part of the trading session.
On the upside, the level of 15,100-15,125 acted as a sturdy wall of resistance and the markets took a U-turn from this zone. It pared its gains in the afternoon session; till here, the plot was similar. However, the only difference between Monday’s and Tuesday’s session was the last leg of the trade. As on Tuesday, the bulls made a strong comeback and Nifty ended the day with gains of almost 1 per cent, just shy of the 15,100 mark.
The broader markets underperformed the benchmark indices as Nifty Mid-cap and Small-cap lost 0.52 per cent and 0.98 per cent, respectively. Among the sectoral indices, Nifty Financial Services, Nifty Private Bank, and Nifty Bank emerged as the top gainers; while on the flipside, Nifty Metal and Nifty Realty were the top losers. India VIX dropped nearly 9 per cent to 22.50 levels.
The price action of the day formed a small-bodied bullish candle, carrying long lower shadow, which indicates that a strong buying emerged from the lower levels. Nifty reclaimed its important short-term moving average i.e., 20-DMA and at the same time, it has managed to close above its previous day’s high.
The weekly options expiry is scheduled today as Thursday is a trading holiday on the account of Mahashivratri. There were two important takeaways from Tuesday’s session, which has laid the foundation for the weekly options expiry day. Firstly, Nifty March Futures saw a reduction of 9.91 per cent, so a rise in the price along with a decrease in the open interest mostly indicates short-covering. Secondly, the 15,000 put strike of the current weekly series saw a fresh open interest addition of 10.59 lakh shares, which took the total open interest in this strike to 30.98 lakh shares. Further, the 15,000 call strike saw a reduction in the open interest of 7.85 lakh shares. If we take cues from the above data, it indicates that as long as the bulls manage to keep their head above the 15,000 mark, it is likely to favour weekly options expiry.
On the upside, sustaining above the 15,130 mark would open gates for a move towards the 15,220-15,275 levels. Meanwhile, a breach of the 15,000 mark would lead to a sell-off towards 14,880-14,900 levels.
Overall, if we sum-up the indication from the F&O data and also, from the fact that we have seen a sharp fall in India VIX, all add up to that if the market sustains above the level of 15,130, the index could test the levels of 15,220.