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  • 06 Dec 2021
  • ICICIdirect Research

AFTER SHARP FALL WHERE NIFTY SHOULD FIND SUPPORT?

Commentary:

Last week Nifty reverted sharply from 17500 levels and it started the current week on dismal note. Performers from Technology and FMCG space attributed to the fall. After few days of cool-off, the volatility rose and moved above 19% mark. As Dollar index is finding support near 96 levels and there is a continued selling in cash by FII’s the INR depreciated by 23 paise in today session.

Major Option activity (Weekly):

Major Call OI change in today’s session: 17100 (25.87 lakh), 17200 (28.9 lakh) and 17300 (29.2 lakh).

Major Put OI change in today’s session: 17000 (16.7 lakh) and 17100 (15.6 lakh).

Outlook:

The Nifty started with relatively lower OI Call base but as it reverted sharply from 17500, aggressive Call writing was observed. Due to elevated premiums, traders are utilizing the opportunity to sell OTM Calls. However, despite aggressive profit booking, 17000 Put option continued to attract OI addition and similar trend is there for Bank Nifty where 36000 remains support. From the current levels, it’s advisable to avoid any aggressive short exposure as both Nifty and Bank Nifty are near its support zone. We feel Nifty should hold 17000 levels whereas Bank Nifty should hold 36000 levels for the upsides to continue.