Except for the spike and breakout on 30th April to 9900 level, NIFTY has been consolidating in a range between 8800 to 9400 levels. Market fell down last week due to weak global cues, however took support around 9100 levels. Good news is VIX did not raise too much which indicates market is stabilizing. Let’s look at the points to be considered for next week:
- OI Analysis: 10000 CALL option has highest Open Interest followed by 9500 CALL. 9000 PUT option has highest Open Interest followed by 8000 and 8500.
- NIFTY is hovering around 20 DMA. NIFTY faced Resistance at 50% Fibonacci retracement level at 9850 and fell back upto 9100 level.
- PUT CALL RATIO (PCR) for 28th May came down to 1.29.
- Maxpain dropped to 9350.
- Volatility index (India VIX) spiked by 28% to 44 on 4th May but gradually dropped to 38 as markets consolidated in a range.
- NIFTY immediate Support at 9100 followed by 8800. Resistance at 9650 and 9900.
- SGX NIFTY indicating positive opening by 0.5% up but this may change depending upon how Asian markets will open tomorrow.
- Macro Data: Industrial Production, Manufacturing Production and Consumer Price Inflation Data for April month will come on 12th May at 5:30 pm. Industrial Production and Manufacturing data is expected to be very bad given our country was in lock down whole April month. Inflation is expected at 5.5% but not very relevant due to lock down. WPI data will come on 14th May at 12 noon but not very significant.
Taking into account of all the above points. NIFTY has to hold 9100 level to continue its upmove and break above 9650 to move to higher levels. Traders need to watch out these levels carefully to do adjustments for any Short Strangles or Iron Condors you may be holding. 10000 CALL and 8500 PUT options seems to be the strikes one can consider to build Options writing strategies. Adjustments are must once NIFTY comes out of the range mentioned above. As always, Market is Supreme, any unexpected UP or DOWN moves due to further developments in Covid19 need to be respected and traded accordingly. These are unprecedented times so carrying positional trades are risky and those who are carrying the positions or would like to open new positional trades SHOULD trade with Hedge on both CALL and PUT side. I am not holding any positional trades at this stage.
Disclaimer: Above analysis is for educational purpose only and not a trading recommendation. Do your own analysis before taking any trades.
