Nifty is at very crucial level for three reasons, as shown on daily Nifty chart -
1) 14300( approx.) is 61.8% of Fibonacci retracement.
2) Currently Nifty is at lower channel border.
3) Nifty has also closed below the lower band of Bollinger band.
Normally, a reversal is imminent if these three indications are there on Chart but I am not sure about that tomorrow. Reasons?
Reason no.1) FIIs are singularly selling since last 4 days and today it (net) sold worth 3383 Crs worth of shares and DIIs on the other hand, bought 2267 worth shares in equity segment. Index and stock futures figures for today, by FIIs were not available till the time of writing this.
Reason no. 2) Look at 1st April expiry option chain in slightly different way - at strikes 14300 & 14350 (ATM strikes) IV on Call side is approx. 25.8 and IV on Put side is approximately 21. If you recall, during the rallying days of Nifty, exact reverse was the case. Put IVs were almost 3-4 counts higher than that on Call side because everybody was selling Puts as they were more sure of making money on rising Nifty. Today, it seems there are more Call writers than Put writers. The total OI and writing on Call and Put sides, however, looks balanced but remember that this is first expiry of the month as well as that of new financial year so contracts will populate more starting tomorrow and then we will get clearer picture.
Today too, Nifty started reversing at around 13:10 hrs after long fall, which is normal for an expiry day, but faced severe selling at 14:55 hrs when it just reached near 14500 (14493) and fell to 14275 within 15 minutes, which is actually not normal at all.
So that brings us to conclusion- In near term Nifty is looking bearish and hence Selling Nifty on rise is better trade idea than buying at low. There is a clear cut Selling area between 14450 – 14495. Put SL above 14525 and trade for a target of 14300.
Happy trading
Disclaimer : As of today, I am neither long nor short on any index options or futures.
1) 14300( approx.) is 61.8% of Fibonacci retracement.
2) Currently Nifty is at lower channel border.
3) Nifty has also closed below the lower band of Bollinger band.
Normally, a reversal is imminent if these three indications are there on Chart but I am not sure about that tomorrow. Reasons?
Reason no.1) FIIs are singularly selling since last 4 days and today it (net) sold worth 3383 Crs worth of shares and DIIs on the other hand, bought 2267 worth shares in equity segment. Index and stock futures figures for today, by FIIs were not available till the time of writing this.
Reason no. 2) Look at 1st April expiry option chain in slightly different way - at strikes 14300 & 14350 (ATM strikes) IV on Call side is approx. 25.8 and IV on Put side is approximately 21. If you recall, during the rallying days of Nifty, exact reverse was the case. Put IVs were almost 3-4 counts higher than that on Call side because everybody was selling Puts as they were more sure of making money on rising Nifty. Today, it seems there are more Call writers than Put writers. The total OI and writing on Call and Put sides, however, looks balanced but remember that this is first expiry of the month as well as that of new financial year so contracts will populate more starting tomorrow and then we will get clearer picture.
Today too, Nifty started reversing at around 13:10 hrs after long fall, which is normal for an expiry day, but faced severe selling at 14:55 hrs when it just reached near 14500 (14493) and fell to 14275 within 15 minutes, which is actually not normal at all.
So that brings us to conclusion- In near term Nifty is looking bearish and hence Selling Nifty on rise is better trade idea than buying at low. There is a clear cut Selling area between 14450 – 14495. Put SL above 14525 and trade for a target of 14300.
Happy trading
Disclaimer : As of today, I am neither long nor short on any index options or futures.