Nifty in uncharted territory, aided by Reliance & ICICI Bank; heavy writing witnessed in 15,400 PE option

Market Update at 11:10 AM: The key benchmark indices have extended their gains and logged a fresh all-time high. Nifty is trading above the 15,500 mark while Sensex is above the 51,750 mark. Reliance Industries, ICICI Bank, and ITC were the top three contributors as they combinedly contributed about 87 points to Nifty.   

On the options' front, massive open interest addition is seen at 15,400 Put option strike as today itself 15,400 Put option added over 30 lakh shares in the open interest. The 15,500 Put option has also seen more than 15 lakh shares in the open interest. The Put option base has shifted higher at 15,400 strikes as maximum open interest concentration is seen at this strike.    

Market Update at 10:00 AM: After a turbulent start, bulls found their mojo back and were seen trading in green. Nifty is trading above the 15,450 levels while Sensex was above the 51,500 mark. Buying interest was visible in broader markets with Nifty Midcap-100 and Smallcap-100 being up by 0.13 per cent and 0.34 per cent, respectively.   

The advance-decline was in favour of advancers while a majority of sectoral indices were trading in green. Defensives such as Nifty Pharma and Nifty FMCG emerged as the top gainers. On the other hand, Nifty Auto and Nifty PSU Bank were the top losers.   

India VIX slipped nearly 3 per cent and was seen trading below the 17-mark.   

Among stock-specific action, PNB Housing and Signet Industries got locked in the upper circuit.

Indian markets reclaimed the record high after three months on Friday (May 28) and the poster boy of this historic day was Reliance Industries, as it single-handedly contributed about 90 points to the kitty of Nifty gains. On the other hand, market breadth decisively skewed in the favour of the bears, indicating that market participants preferred to take profits off the table before the weekend.  

Technically, Nifty has continued its formation of higher highs & higher lows but the fatigue is quite visible as Nifty formed an indecisive candle on the daily chart. However, on the weekly chart, a bullish candle has been witnessed. Going ahead, we expect some consolidation in the index with support seen at 15,050-15,120 regions. On the higher side, sustaining above the level of 15,500 may open gates for a further upmove of 200-300 points in the near term.  

Interestingly, on Friday, Nifty Futures added over 5.33 per cent in June month contract that theoretically indicates a long built-up as open interest addition is seen along with price rise. While on the other hand, the 15,500 Call option has an open interest concentration of 27.04 lakh share, which indicates that this level is likely to act as an immediate resistance.   

There is no point in discussing the indicators. When the market is at a lifetime high, all the indicators/oscillators show bullishness. Let us ignore the indicators for the time being.   

As markets hit a new lifetime high, once again, the million-dollar question that hovers in everyone’s mind is- how further up would the markets go? Isn’t it? Everyone wants to know whether the market is going to take a U-turn from here on or continue to head higher?! We believe that the 15,500 level would be a decisive one. As long as Nifty is unable to cross this level,  consolidation is likely in the index and traders can adopt the buy-on-dips strategy.