Indicating sell on rise opportunity in the market, a red candle with minor upper shadow was formed on the daily chart on Monday as Nifty ended 73 points lower.
Nifty is currently placed at the immediate support of 10-day EMA at 19,650 levels and the important lower support of 20-day EMA is placed around 19450 levels. The said 20-day EMA has been holding for the past three months and has offered support for Nifty to witness upside bounces from it in the past, said Nagaraj Shetti of HDFC Securities. Open Interest (OI) data indicates a build-up of fresh short positions. FIIs were seen liquidating long positions in index futures as indicated by the Long-Short Ratio.
Volume profile indicates Nifty has strong support around the 19,550-19,475 zone. On the call side, the highest OI was observed at 19,800 followed by 19,900 strike prices while on the put side, the highest OI was at 19,500 strike price. On the other hand, Bank Nifty has support at 45,400-45,500 while resistance is placed at 46,250-46,370 levels.
What should traders do? Here’s what analysts said:
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
On the daily charts, Nifty is retracing the rise from 19,303-19,992. Currently, it is around the 50% Fibonacci retracement level and is expected to attract buying interest. The daily momentum indicator has triggered a negative crossover, which is a sell signal. Both price and momentum indicators are indicating weakness. However, we are still of the opinion that this is a dip that should be bought into as the overall uptrend is still intact. In terms of levels, 19,600 – 19,580 shall act as a crucial support zone, and on the upside 19,800 – 19,840 shall act as an immediate hurdle zone.
Rahul Ghose, Founder & CEO – Hedged
Nifty saw a significant call writing at 19,700 and 19,800 levels for this week’s expiry. The current OI distribution looks like the expiry is going to be below the 19,800 level unless we see Bank Nifty cross the 46,300 mark. Bank Nifty continued to see put writing at the 46,000 level for the 3rd August expiry and for the current week expiry, traders have converted their short put positions into short straddles. This basically means that traders are expecting the expiry to be in and around the 46,000 level.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The short-term trend of Nifty remains weak and the present weakness with volatility is expected towards the important support of 19,500-19,400 levels before showing an upside bounce from the lows. Immediate resistance is placed at 19,780 levels.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
The resistance for Nifty shifts down to 19,800 from 20,000 on account of heavy call writer additions today. A breakdown and close below 19,700 can intensify the selling pressure and take Nifty to 19,500 zones where its next support is placed. However, the Put-Call Ratio (PCR) for Nifty is 0.69, marginally below the 18th May level of 0.75 when the Index was at 18,130. Nifty has risen nearly 9% from 18th May until today.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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