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More than 60% of F&O banking stocks start new series near Put base

Commentary

Major indices ended last week on an optimistic note as broad based participation continued. The Nifty should be a potential candidate for fresh long accumulation as it started the new year with lower OI base of only 97 lakh shares. Volatility index cooled-off significantly across the globe with India no exception. It did relatively better along with price action.

Banking stocks Put base:

Outlook:

The overall set-up should be considered positive; as aggressive closures were there in most heavyweight Call writing positions. In the recent few days, the Dollar index declined marginally but the rupee managed to appreciate almost 160 basis points, which is a positive sign. We feel the Bank Nifty should lead the charts from here as more than 60% of its components have started the January series near their Put bases. Also, looking at the historical records, most of the time buying has emerged whenever stocks have started the series near their Put bases. The Bank Nifty has relatively underperformed. Due to this, short positions have been rolled to the January series. Closure in these short positions should trigger at least 4-5% move in banking stocks. These should help the Bank Nifty future to easily test 37000 levels on upsides.