The expiry day saw markets confined in the tight range of 4838 and 4880 and finally closed a shade above the previous close.
Though as mentioned in yesterday's post, Infosys gave a strong spike towards the end, it was not good enough for the markets to be pushed beyond the levels of 4865.
Now that the historic volatility is again shrinking back to lower levels since the consolidation has been for a while, it might be time for the march series to see heightened volatility expansion and a strong move either side. A break and close above 4950 levels might start a new uptrend going forward and a close below 4785 a new downtrend.
Nifty has been tightly hovering in a range taking strong support at the 20 DMA around 4838. Bears could not take advantage of the gap down move of yesterday and it again ended on a neutral note.
Looking at the options data, 4900 call and 4800 put recorded huge transaction on the 19th and since then the time premium has been eroding in both the options steadily as market has been hovering in the range. This points to the fact that both options could have been written on that day.
4900 call saw huge unwinding yesterday with the highest transaction for the month and 4900 put has seen accumulation and this is pointing to some amount of bullishness as we get into the expiry day.
Infosys has been the major heavy weight used to move Nifty intraday for this series and it is likely to be the key mover today also.
Yesterday saw markets do a reverse of what was done the previous day. It had a gap down opening, but then markets bounced back before it could reach the target of 4823, 4805 on the downside.
The bounce was also not strong enough to push the markets further high beyond the key resistance level of 4885.
Markets have been moving closely around the 20 DMA which is currently at 4838 for the past five sessions and have not indicated on a strong directional move with any move on one side being nullified by an equal move on the other side.
There has been large accumulation seen in 4800 puts yesterday and a move below 4823 would indicate strong hands have accumulated and can push markets further below to 4805 and 4785 levels.
Yesterday markets saw a gap up opening and bulls immediately pushed markets to the key level of 4914, though bulls were unable to reach and break the strong resistance level of 4930.
It was expected that any strong move on one side to be nullified by an equally strong move on the other side, but then the way that happened in the same session has given an undue advantage to the bears at this stage.
There has been unwinding in the near strike puts of 4800 and 4700, and accumulation seen in 4900 and 5000 calls. This is also indicating that bears position is strengthening for this expiry.
It could now be the turn of bears to push markets to lower levels of 4823, 4805 and even 4785 levels and based on the accumulation seen in puts then, it could be the turn of bulls to fight back.
The markets swayed wildly on friday and finally settled at 4845 a key level and also just below the 20 DMA.
Also the swift move happened towards the end from the key support level of 4805 towards the day high.
As given in the weekly writeup, markets can see a rally and another attempt to scale 4930 levels. Going forward there will be heightened volatility and swift intraday moves and as of now a strong move on any one side could be nullified by an equally strong move on the other side in the next session.
Last session witnessed strong intraday volatility and in the end, the week ended on an almost doji note with both the bulls and bears not able to close the markets in their favour.
Though bears were able to push the markets below the indicated level of 4823, it was more of short lived and bulls were able to charge back, but not to the extent of triggering the next round of squeeze and the markets finally settled the week on a neutral note at 4845.
The weekly charts are indicating some bullishness and also a move towards 4985, 5035 levels.
On the other hand, Nifty has been struggling to move past the crucial resistance level of 4930 and bears are trying to pull it down at every opportunity as mentioned in
With the implied volatility of both put and call ruling at almost 30 and the PCR near 1 (volume PCR is 0.94 and open interest PCR at 1.03) for the February series, the current stance is that both bulls and bears are equally poised for this expiry and any move on one side could be nullified by an equally opposite move on the other side in the subsequent session.
Yesterday markets witnessed the short squeeze move and exactly reached the target of 4930 levels and bears took over. Though the bearish moves towards the end appeared strong, bulls were able to regain 4900 levels and also managed to close above the 20 DMA.
Since the intensity with which the moves happened in the past two days is severe, it is more likely that markets would make further attempt to break away either side rather than consolidation around the 20 DMA (currently at 4883) at this stage and there are more chances of a strong bearish move in the near term.
The initial part of the day saw bears taking upperhand and not allowing bulls to move past the key level of 4825 and markets testing sub-4800 levels.
But on Nifty reaching 4845 levels, the short term boundary, the short squeeze happened and pushed markets to the next level of around 4885 levels.
Since the squeeze is powerful enough, there are strong chances of markets to penetrate 4900 levels and reach the next target of 4930, but then an even more powerful bearish move is expected to pull down the markets going forward.
Only on a strong close above 4985 levels would change the short term bearish trend. As of now it is sell at higher levels.
Overall the markets seem to be in a consolidation phase, but there is heightened intraday action seen and the volatility is increasing.
There are sudden moves happening either side and markets still seem to be direction-less and this is indicated by the fact that the futures oscillate between premium and discount during intraday.
Overall bears have an upperhand below 4845 and bulls are unable to push the markets beyond that level. Only a move above that would bring in a round of short squeeze to 4885, 4930 levels but that doesnt seem to happen and the 20 DMA is steadily decreasing and will be at 4885 levels soon which should act as a strong resistance even if any bull move happens immediately.
A powerful bull trap is seen around 4825 levels and if markets struggle to move up that level in the early session today, there are chances of it cracking further down and testing 4757 levels.
The last session in the previous week completely saw bulls gaining strength and throughout the session, markets were trading above the 4800 level.
This has given enough confidence to the bulls, combined with the increase in open interest on the near strike puts and unwinding seen in the near strike calls.
Pattern-wise markets are still very much under the control of bears and at this juncture any break of 4800 levels on the downside will trigger a fresh round of selling and can push markets towards the near term goal of 4590.
On the upperside, clearly 4930 is being established as a strong resistance level and if at all the upmove happens beyond 4885 levels, bears are likely to takeover again strongly from 4930 levels.
Yesterday bulls were able to push the market a bit higher, but then bears immediately took over towards the end and the close is almost near the day's low. Pattern-wise, it has formed a bearish change of guard pattern and signifies the continuation of the medium term bearish trend.
Though the bearish move towards 4590 levels breaking the 200 DMA (currently at 4662) is expected any time, there are also chances of the markets consolidating before that.
Any move above 4830 would trigger the next round of short covering till 4885 levels, but bears having strong upperhand right now might not allow that to happen.
Yesterday markets made a new low for the series and almost reached the next target level of 4670.
From the day's low the bounce was strong due to the covering of late shorts.
Given this scenario, there might be a very short term rally for two to three sessions, triggering more of short squeeze and Nifty might also move on to test 4820, 4860 levels and even higher with the strong ceiling being 4950.
Still there are strong chances of Nifty making a powerful bearish move in a few days and test the final target of 4590.
On Saturday, during the short session, there was a short run up and the session was dominated by bulls.
Though there was a run up, the key resistance level of 4765 acted as a strong level, but the close is also very near to that level.
Any move beyond 4785, would trigger short squeeze to an extent to push Nifty to 4820 levels.
But the overall trend is still bearish and the final leg of the bearish move has not yet happened. This is due to happen any time this week and likely to test the bottom level of 4590. Any move below 4635 can be used to accumulate long positions for the short term.
It was a decisive victory for the bears yesterday, after bulls made a failed attempt to conquer 4950 the day before.
At each of the key resistance, bears showed their might and brought Nifty to a close which almost engulfed the previous sessions fake bullish move beyond 4915 levels.
Now that bears have established the strong upperhand, a move towards the 200 DMA is not ruled out and the earlier levels mentioned in the previous post of 4710, 4670 looks like possible targets for this move.
Any move below 4635 levels in the short term, would bring in sharp buying and a strong short squeeze is expected at this stage.