Navneet Daga
The Nifty is consolidating with overhead resistance near the 10800-10900 zone. After Monday’s throwback from ~10900, the index dropped to 10,563 on July 14. The index reclaimed the 10,800 level on July 15 but failed to sustain at higher levels.
It traded in a narrow trading band of 160 points on July 16. On a closing basis, the Nifty is defending its 13-day EMA for the past one month. A decisive break down below 10,600 can drag the index to the 10,500-10,450 zone, until that happens, it may consolidate between the band.
Open interest additions are visible across the strikes for the coming weekly expiry. 10,800 call and 10,600 put strike holds maximum open interest base, suggesting traders are not expecting any major move on either side. India VIX continues to hover at lowest levels in four months.
On the sectoral front, mild fresh longs were seen in metal, realty and financial stocks; while fresh shorts were seen in telecom stocks.
The Nifty breadth was mildly positive, while the sectoral trend turned mixed on July 17. Nifty IT index continued its northbound journey and registered a record peak at 17,491. The pharma index was holding ground but positive follow-up action is essential to gain further momentum on the upside.
The Bank Nifty lost around 9 percent from the recent peak. After marking day’s low at 21,028 on July 16, it recouped intraday losses. Minor recovery might be there in the Bank Nifty, however, levels of 22,000-22,500 are likely to act as an immediate hurdle zone. Metal index was holding ground, positive follow-up action could trigger short covering in select stocks.
(The author is Senior Derivatives Analyst – Institutional Equities at YES Securities.)
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