After two weeks of nearly an 8% correction, Nifty consolidated in the last week with a weekly gain of less than 1%. Throughout last week, any strong move in one direction was immediately neutralised by an equally powerful move in the other direction and at the end saw both call and put premium getting completely eroded with implied volatility even dropping to 16%.
On friday again, there was hectic activity in both 5600 puts as well as 5700 and 5800 calls when markets ended on a neutral note around 5700 levels.
Overall market is still under bearish influence and might see a dip below the 200 DMA which is currently at 5614, and there is a good chance of markets breaking 5500 levels before the close of this series in the next three sessions. This view holds good as long as market is not able to test 5765 levels. It is more of a sell on rise market with 5765 as stop on short positions for a target of 5488.
FII have been net sellers of around 3700 crores in index futures and have bought options around 13000 crores for this month.
PCR ratio also dipped below 1 in the last two sessions and is at 0.89 which is also favouring bears to a good extent.
Resistance levels : 5704, 5745, 5762
Support levels : 5639, 5577, 5544, 5488
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