Nifty closed at previous year high close on friday at 5282 levels which was earlier made on 6 Jan 2010.
It now looks like the markets to fall back in to a tight range for the remaining three sessions in this financial year and a strong move to follow after that.
The 20 DMA will be at 5200 levels in a couple of days and will provide the support moving forward. A consolidation and a retest of 5200 levels would give the rally added strength and any upmove before that would be vulnerable for a strong correction at this stage.
The weekly charts indicate a strong resistance at 5370 levels and it is unlikely for the markets to move past that level in the near term.
The levels to watch out for the week. Resistance at 5311, 5370 and Support at 5187 and 5137
It was end of another derivative series yesterday and bulls totally dominated the whole series including the expiry and pattern-wise took it to the close mentioned previously.
Now that a new series has begun and bulls are in upperhand, will there be a momentum run breaking the year high. As of now it looks like another leg of consolidation is getting over and market has the potential to reach 5366 levels also in the short term. 5163 level should act as a strong support going forward.
Throughout this series, it has been bulls completely dominating the markets and being the expiry of March derivative series, pattern-wise bulls are placed on strong ground and are likely to push markets for a higher close.
On the contrary, in the past sessions, there were heavy unwinding seen in 5300 put, as well as 5200 puts indicating some amount of weakness. If the markets are to be pushed higher, there might not be any reason for 5200 puts to unwind. The overall volume PCR and PCR indicates a neutral to a bullish move. The transaction on 5200 calls and puts far exceeded the amount seen for previous expiries and points to a close around 5206 levels.
Pattern-wise, bulls can take market to a close of around 5256 levels.
Overall, it is better to wait for the intraday data on the open interests around mid-day to strategise and trade the expiry rather than positioning around the open itself.
Will be updating the trading calls around noon today.
Yesterday markets had a strong gap down and then bulls tried to push the markets beyond 5250 levels which acted as a strong resistance multiple times and bears took over and closed the markets near another key level of 5206.
The overall undercurrent is bullish and it could be the the turn of bulls to take control in the remaining two sessions for the expiry including today.
The options data is not favouring bulls or bears at this juncture and the volume PCR is remaining neutral. Overall 5200 call and put saw heavy transaction yesterday and 5300 puts saw unwinding.
Markets on friday reached and closed at a new high for the series. This week being the derivative expiry week, would see markets back under the control of bulls, though today markets could open gap down and test sub 5200 levels.
Throughout the series bulls have dominated completely and are likely to take upperhand on any correction and push markets back into their territory.
The levels to watch out for the week are - resistance levels 5275, 5335, 5365 and support levels 5196, 5134, 5085
Finally bulls were able to break the 5250 barrier also and also almost closed near that level by another powerful move towards the end from the
day's low yesterday.
Bulls seem to be positioned strong enough to retest the year's high level of 5311 and also break it in the coming days. The strong consolidation has strengthened bulls stance.
The options data is also suggesting an upmove and yesterday the open interest PCR has reached more than 2 indicating strong bullishness. Also the volatility is still at its multiple year lows suggesting further expansion and a strong one sided move.
Markets were dominated by bulls yesterday and the much expected breakout to reach the levels of 5175 and 5206 happened yesterday.
The options data were pointing to the fact that the build up in calls were less when compared to the puts. The volatility at historic lows triggered the move for the breakout, only that it happened after a prolonged consolidation.
Now the question is how powerful this breakout is and what could be the immediate target? Since yesterday was the first day of the strong up move, further momentum is expected today and the levels of 5250, 5275 could also be reached. As of now the indications of the correction are still not in place and this looks like the initial move to kick start the momentum.
Yesterday also markets were confined between the week range of 5100 and 5150 levels and the historical volatility has again dropped to two year lows.
In this situation, the general expectation is that the markets will move very strongly in any one direction and the more the consolidation, the more severe will be the one sided move. It is also likely that the one sided move would be triggered for this expiry itself.
There are indications from the options data of a possibly strong up move as the near strike calls unwind and more of the near strike puts add open interest.
Last week saw markets consolidate in a very tight range, almost between 5100 and 5150 levels.
The historical volatility has again dipped to two year lows and markets have come to a point where there has to be a strong move in any one direction in this week.
Given the fact that 5000 put has the highest open interest and is at 1.2 crores and if the puts have been written earlier, there is less likely chance of markets to see a huge correction at this stage. On the other hand in the past session, there has been increase in the open interest of 5100, 5200 as well as 5300 calls and looking at all indicators, it could well be a case of accumulation by strong hands and markets likely to see higher levels also in this week.
A strong bull trap is seen around 5150 levels in the intraday charts on friday and going forward any move to nullify this, i.e a move beyond 5150 levels would favour bulls to a good extent and markets can move on to test 5175, 5206 levels immediately.
The levels to watchout for the week - Resistance levels : 5206, 5245, 5311 and
The last half an hour in yesterday's session saw bulls charging and breaking again the key resistance of 5150. Though the expected move till 5175, 5206 did not happen yesterday, it is more likely that markets will open on a strong note and likely to reach the levels early in the morning session today.
There was unwinding seen in 5100, 5200 calls and 5000 put has an open interest of over 1.2 crores with 20 lakhs being added yesterday and FIIs have also bought Nifty futures around 1000 crores.
All this points to a strong bullish move at this stage and the next thing to watch out for is the heavy unwinding in 5000 puts at higher levels which could then signify that the markets have reached an intermediate peak. As of now 5206 is a crucial level, though for the sort of bullishness that all indicators have shown, this seems to be a very easy target to be broken on the upside.
The consolidation has strengthened enough for a strong up move to follow and it is highly likely that Nifty will make an attempt to scale 5175 which could act as a minor resistance and on breaking that would be able to touch 5206 levels.
Yesterday almost saw the mirror image of the previous day's pattern. For most of the day markets were trading higher than the previous close.
Looking at the PCR data, the volume PCR is at 1.39 and this is a strong indication of a strong rally. 5000 puts have crossed one crore in open interest and as on now the indications are that the puts have been written.
All this points to the fact that Nifty can run up to 5175, 5206 levels most likely today itself and 5206 could act as a strong resistance for markets to break and reach further high.
The gap up of yesterday again placed bulls in a very strong position. Though markets faced stiff resistance around the key level of 5150, the amount of retracement from that level is less and bulls still have a strong upperhand going forward.
Markets might also consolidate between 5050 and 5150 levels before bulls charge and push markets to higher levels. Any break of 5150 would immediately push markets to test 5186 levels.
The historic volatility is at year low and the implied volatility is also ruling low and this signifies a strong move in any one direction going forward and as of now a bullish breakout is expected if this consolidation strengthens.
On friday, Nifty took strong support at the first mentioned level of 5070 and closed just its previous day's close.
Again to reiterate the point of a strong bullish move ahead, the short covering has not happened and retails have not yet participated fully in this rally and are waiting on the sidelines for markets to correct to enter and have been selling at this juncture.
5100 call added around 13 lakhs in open interest and a gap up will suggest that there had been strong buying in that when markets dropped below 5100 levels sharply on friday.
The weekly resistance levels are 5150, 5186 and 5254 and the support levels are 5050, 5012, 4959. Market is not likely to fall below 5050 without triggering a powerful short squeeze at this juncture.
The near term strong resistance is seen around 5186 and is likely that bulls could push markets to that level.
Markets consolidated yesterday taking key support at 5050 level and now the expectation is that bulls will be back to push markets further higher.
The short covering has not happened and retails have not yet participated fully in this rally and are waiting on the sidelines for markets to correct to enter and have been selling at this juncture.
The options data is also pointing to a bullish move and there has been huge writing seen in 5000 put. The volatility of the call options is on par with the historic volatility and much lower than the put options which is also pointing to bullishness.
Yesterday's pattern was almost a repeat of the previous day's pattern and bulls took control right from the beginning. Nifty broke all key resistances including 5085 and closed strong above that level.
Though market is getting into the overbought region, options data is indicating further upmove from this juncture.
If markets consolidates around the level of 5050 for a while, then the next leg of upmove could be intense and momentum is also likely to kick in at that stage.
On the budget day, bulls were able to push the markets beyond all the immediate resistance level of 4950 and 4985, but failed to sustain to those levels and closed below 4930.
Though the pull back towards the end of the session is significant, equally significant is the upmove that started in the mid session and markets have not come down to retest the level of 4900 and this signifies bulls are having the upperhand right now.
It is likely that bulls should be able to push the markets to test the 5000 mark and also close the markets above the crucial level of 4950.
For the week, if bulls succeed in closing the markets above 4950 mark, then we can see rallies till 5100 levels and a round of consolidation around 5050 levels.
For the week 4840, 4823 should act as a strong support and a break and close below that level would bring back bearishness.