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Nifty unlikely to hold much hyped support of 16000
Commentary
In the past few sessions, the Nifty has been finding support near 16000, which is the highest Put base. However, it remained in a range and the Call writing quantum continued to remain higher with no respite in the volatility index, which remained on the higher side. Sectorally, IT continued to remain a laggard and was witnessing short rollover for June. Other sectors like cement, realty and metals also witnessed follow up selling with few attracting fresh shorts.
Major option concentration:
Major Call OI: 16000 (68.95 lakh), 16100 (72.89 lakh) and 16200 (42.8 lakh)
Major Put OI: 16000 (11.78 lakh) and 15800 (38.8 lakh).
Outlook:
Despite starting the day on a positive note, the Nifty failed to maintain follow up momentum and reverted from higher levels. In the process, it violated its highest Put base of 16000 in today’s session. Now, for the major part of April and May series, whenever, the index has broken the sizeable Put bases, the Call writing quantum has increased and on a net basis the Call writers has made money. We feel aggressive Call writing quantum is placed now in 16000 strike followed by higher strikes. The Nifty is unlikely to move above 16000-16040 whereas on the downside it should test 15750. A similar sell-off is expected in the Bank Nifty, which should test its highest Put base of 34000.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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