Trade Setup: RBI policy & weekly options expiry to keep Nifty shaky

Nifty opened positive on Wednesday and surged higher in early trade. However, the market came under pressure in the 11,200-11,250 zone. The index came off over 100 points from there, wiping out the gains completely.

The second half of the session saw more of a rangebound trade. After briefly slipping into the negative territory for a couple of times, the headline index ended flat with a minor gain of 6.40 points, or 0.06 per cent.

The expiry of weekly options is going to dominate trade on Thursday. Nifty is now between be the highest Call and Put concentration levels.

Highest Call open interest stood at 11,200 and the maximum Put OI concentration was at 11,000. This creates the probability of a rangebound move. However, RBI’s policy can alter the equation as well.

Volatility index INDIA VIX slipped another 1.04 per cent to 23.5675.

On Thursday, Nifty is likely to see a tentative start and the 11,065 and 11,200 levels are likely to act as key resistance points. Supports will come in at 11,040 and 10,935 levels.


The Relative Strength Index, or RSI, on the daily chart stood at 59.40. It remains neutral and does not show any divergence against the price. The daily MACD remains bearish as it trades below the signal line. A Spinning Top occurred on the candles.
Spinning tops form when there is little difference between the open and the closing price. Such candles often portray indecisiveness among market participants.

While staying well inside the upper rising channel, Nifty continues to show vulnerability at higher levels. As of now, the 200-DMA, which is at 10,854 level, is a major support for the index on a closing basis.

RBI policy review will have the market react in a volatile way in the morning. However, given the expiry of the weekly options, it would be important to watch the 11,200 and 11,000 levels. Stay stock-specific and do no attempt to blindly chase any up-move. We will see isolated stock-specific performance coming our way. The market may remain rangebound and a correction can only widen that range.

(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)