Technical Analysis
WHAT LIES AHEAD : NEAR-TERM PICTURE
SPOT NIFTY : The last week of December was a quite muted one as Nifty was rangebound for the last three trading sessions.
Nifty traded in the range of 17,146-17,286, which is just 140 points. On Monday, Nifty had registered a swing low of 16,833 and then, shot up by nearly 370 points to close December expiry at 17,203. Thus, we witnessed Nifty rising from the ruins as it closed higher by 131 points since the last expiry. However, on a monthly basis, we find that the weakness still persists as Nifty closed below the previous month’s expiry, which was at 17,536.
On the day of expiry, Nifty lost about 10 points. Moreover, India VIX soared about 2 per cent and currently, lies at 16.57. The standout sector was Nifty IT, which surged around 1 per cent while Nifty Metal index showed poor performance on the day of expiry. NTPC and HCL Tech were the top gainers among Nifty 50 pack and played a major role in supporting the market.
A positive commentary can be made regarding the closing on December expiry as Nifty remained above the psychological level of 17,000 after slipping initially during this week. Thus, the level of 17,000 happens to be a crucial support level, followed by the 16,800 level, which was the swing low for this week. Another good point to note is that Nifty closed the expiry above its 20-DMA, which lies at 17,154 and indicates that Nifty might have seen its major downfall. Thus, a daily close above 17,285 will bring positivity and further test the levels of 17,379 as well as 17,489. In case Nifty closes below 16,148, we must not be surprised if it tests the levels of 17,000- 16,950. Hence, it is better to wait for a decisive closing above/below the given levels to understand the trend of the market.
NIFTY DERIVATIVES: Since the last monthly expiry, Nifty Futures has plunged about 381 points or 2.16 per cent. The open interest decreased by 15.34 per cent on the day of expiry and Nifty Futures ended at 17,207. For the monthly expiry of January, the PCR stands at 1.66, which indicates extreme bullish sentiment in the market. On a weekly expiry day, India VIX has surged about 2 per cent and stands at 16.57.
For the expiry of January 6 i.e. the next weekly expiry, the total call open interest is at 4,71,242 while the total put open interest is at 4,58,058. On the call side, 17,200 hold the maximum open interest of 51,378, which is followed by 18,000 strikes having 46,134 open contracts. On the put side, the 17,200 strike has the highest open interest of 54,943, and the next in line is the 17,000 strike, which has 38,795 contracts withstanding.
On Thursday, we observed that the maximum addition of open interest has been done at 17,200 in both, the call as well as the put sides. Thus, market players are largely betting that Nifty would trade somewhere near 17,200 until the first week of expiry. The price of the straddle is about Rs 300 and thus, the upper limit would be 17,500 & 16,900 on the lower side. Hence, more of a consolidatory week is expected. For monthly January expiry, the total call open interest stands at 2,91,128 while the put side holds the total open interest of 4,83,415. For January first week expiry, Max Pain is at 17,200 while VWAP is at 17,268.
