There are mixed signals now. No, we are not looking as bearish as we were earlier but bullish steam too seems to have cooled off. Nifty today made a perfect doji candle which in itself suggests indecision or pausing a bit. Lets us check other data too.
1) FII & DII data: As per provisional data for today, FIIs were Net sellers by 828 Crs and DIIs were Net buyers by 473 Crs. Absolute figures for buy/Sell for FIIs are also in normal range of 5000-6000 Crs. So does it mean that FIIs have resumed selling. I don't think so. The final figures for Monday reveal that FIIs purchased 2856 Crs worth shares in Equity and were Net buyers in Index and Stock futures too, like they did on Friday. In stock futures they bought contracts worth 39258 Crs and sold contracts worth 38454 (very high figures). So that still means they are not holding these and were trading bets probably, which again shows uncertainty.
2) Option chain data: On PUT side, highest total OI and highest fresh Put writing is at 11500 strike and there is unwinding on 11400 and 11300 strikes. This shows that Put writers are getting confident of 11500 level and shifting their bets to higher strike. So for this expiry, 11500 looks good support. On CALL side, highest total OI and fresh highest Call writing is seen at 11700 (with good lead over numbers on other strikes) which therefore looks as reliable Resistance. One interesting thing in option chain is this that if we assume 11500 as good support, then there are approximately 63 lakh contracts ( from 10900 up to 11450 strike) on Call side which will need squaring off before expiry. Translating these contracts in absolute shares mean 47.25 crores Nifty shares. So when Call writers start selling these contracts (in loss) as soon as nifty goes down a bit, this might lead to another massive actual-short covering rally. Now this might happen on thursday, when they have to compulsorily square off positions. This is also what charts are suggesting.
3) Charts : Nifty today finished as a doji candle with lower high and higher low. So on chart, limits are those set by yesterday's high (11694.85) and yesterday's low (11471.35). Even by option chain similar limits are observed. I believe patterns work best on daily charts but for clarity if we look at 15 min chart, we can see ascending triangle pattern of sorts, which when reaches point of origin should give a breakout. This is what I was referring to when I said that compulsory squaring off of short side contracts might lead to another short covering rally on thursday. As for tomorrow, there are no clear buy/ Sell levels but Buy at lower limit (11470) and Sell at higher (11700) if and when Nifty reaches there with SL of around 30 points.
All the best. Happy trading.
1) FII & DII data: As per provisional data for today, FIIs were Net sellers by 828 Crs and DIIs were Net buyers by 473 Crs. Absolute figures for buy/Sell for FIIs are also in normal range of 5000-6000 Crs. So does it mean that FIIs have resumed selling. I don't think so. The final figures for Monday reveal that FIIs purchased 2856 Crs worth shares in Equity and were Net buyers in Index and Stock futures too, like they did on Friday. In stock futures they bought contracts worth 39258 Crs and sold contracts worth 38454 (very high figures). So that still means they are not holding these and were trading bets probably, which again shows uncertainty.
2) Option chain data: On PUT side, highest total OI and highest fresh Put writing is at 11500 strike and there is unwinding on 11400 and 11300 strikes. This shows that Put writers are getting confident of 11500 level and shifting their bets to higher strike. So for this expiry, 11500 looks good support. On CALL side, highest total OI and fresh highest Call writing is seen at 11700 (with good lead over numbers on other strikes) which therefore looks as reliable Resistance. One interesting thing in option chain is this that if we assume 11500 as good support, then there are approximately 63 lakh contracts ( from 10900 up to 11450 strike) on Call side which will need squaring off before expiry. Translating these contracts in absolute shares mean 47.25 crores Nifty shares. So when Call writers start selling these contracts (in loss) as soon as nifty goes down a bit, this might lead to another massive actual-short covering rally. Now this might happen on thursday, when they have to compulsorily square off positions. This is also what charts are suggesting.
3) Charts : Nifty today finished as a doji candle with lower high and higher low. So on chart, limits are those set by yesterday's high (11694.85) and yesterday's low (11471.35). Even by option chain similar limits are observed. I believe patterns work best on daily charts but for clarity if we look at 15 min chart, we can see ascending triangle pattern of sorts, which when reaches point of origin should give a breakout. This is what I was referring to when I said that compulsory squaring off of short side contracts might lead to another short covering rally on thursday. As for tomorrow, there are no clear buy/ Sell levels but Buy at lower limit (11470) and Sell at higher (11700) if and when Nifty reaches there with SL of around 30 points.
All the best. Happy trading.