After 10 days of continuous rally for 1100 points, yesterday NIFTY closed marginally low. NIFTY touched all time high of 14244 during opening of the market but that level what not tested later again. NIFTY also broke Tuesday low but recovered most of the fall. Overall it was very volatile day with 200 points swing. European markets closed very positively, US markets closed higher except NASDAQ, Asian markets trading positively, US & European futures trading positively and SGX NIFTY indicating gap up opening by about 80 points.
F&O Data Analysis (7th Jan series): Highest OI is at 14500 & 14200 CALLs and 14000 & 14100 PUTs. Highest OI addition is at 14200 & 14250 CALLs and there was no PUT addition yesterday except for very minor volume at 13950. There was very aggressive CALL writing and at the same huge unwinding of PUTs as a result of this PCR is dropped to 0.79 from 1.28 but Maxpain is still at 14100. Looking at F&O data as on today market participants are expecting NIFTY to close between 14500 and 14000 today. Today expiry will be difficult one i guess, this is because, many options writers aggressively wrote 14200 & 14250 CALL options yesterday as market fell 200 points yesterday from days high. However, now looking at global markets and SGX NIFTY, looks like yesterday high will be taken out during opening of the market hours itself. This might force CALL writers and FUTURES shorts to square off their positions or shift them to higher level, in which case NIFTY may go up further fast.
Technically speaking: Support & Resistance levels for Positional Traders based on Daily Charts: Support: 14040, 13950, 13860 and 13775. Resistance: 14290, 14400 and 14500. Support & Resistance levels for today based on Hourly charts: Support: 14200, 14155, 14100, 14040 and 14000; Resistance: 14290, 14340 and 14380; Today it might be risky to take trades at opening, so i might trade with less volume during market opening and then build positions as market moves. Strikes at 14450 and above on CALL side, 13800 and below strike PUTs may be safe ones during opening. As always, expiry should be traded very cautiously due to Gamma risk and should be in a position to manage their positions through adjustments very quickly in case of big moves in underlying.
FIIs sold 483 crores worth of stocks and DIIs sold 380 crores worth of stocks in cash market yesterday.
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Disclaimer: Above analysis is just my opinion based on Technical Analysis, F&O Data study and my experience in the market. This information is for educational purpose only, and it possible that my analysis may go wrong. So, take your own decisions or consult your Financial advisor before taking any trading or investment decisions.
