All the three- Nifty, Banknifty and Sensex made new highs today! Nifty and Sensex closed at record close. So how does one trade indices at these levels? You cannot short since it is in strong upward momentum and you cannot long because you don’t know when the upmove will stop! Let us check our data thoroughly to get hold of situation.
FIIs today were Net buyers by 1248 Crs and DIIs were Net sellers by 908 Crs. It means that FIIs are not wary of buying even at such high valuations when economic indicators are, conclusively, still not showing any sign of turnaround. And, direction is as usual determined by FII activity. RSI is at 63 which means we are still not in overbought zone. MACD is yet not in green zone and is about to come in one. On daily chart, Nifty and BNF both made higher high, higher low and higher close candles as compared to yesterday. All this suggests that there is still more upside to Nifty and BNF. So if DIIs book profit which might cause Nifty and BNF drop, FIIs will jump and buy at right levels. So what are these right levels?
For that we check option chain. Nifty’s option chain data suggest that there is strong support at 12000 and new support is developed at 12100 on the basis of total OI and Put writing. There is no credible resistance based on Call side total OI and Call writing. So based on this, Buy if Nifty comes in the range of 12000 for sure. Banknifty similarly can be bought at 32000. Please check my video posted on youtube under channel name Market Movers India for slightly more content. There is another strategy for traders who know and are comfortable writing options since both indices are likely to remain here for some time. One can write Call and Put option of same strike of say 12100 (delta neutral strategy) or sell one Put of 12100 and Sell one call of 12250 (since CMP is at 12165). Both will give gain if Nifty hovers around 12100.
All the best. Happy trading.
FIIs today were Net buyers by 1248 Crs and DIIs were Net sellers by 908 Crs. It means that FIIs are not wary of buying even at such high valuations when economic indicators are, conclusively, still not showing any sign of turnaround. And, direction is as usual determined by FII activity. RSI is at 63 which means we are still not in overbought zone. MACD is yet not in green zone and is about to come in one. On daily chart, Nifty and BNF both made higher high, higher low and higher close candles as compared to yesterday. All this suggests that there is still more upside to Nifty and BNF. So if DIIs book profit which might cause Nifty and BNF drop, FIIs will jump and buy at right levels. So what are these right levels?
For that we check option chain. Nifty’s option chain data suggest that there is strong support at 12000 and new support is developed at 12100 on the basis of total OI and Put writing. There is no credible resistance based on Call side total OI and Call writing. So based on this, Buy if Nifty comes in the range of 12000 for sure. Banknifty similarly can be bought at 32000. Please check my video posted on youtube under channel name Market Movers India for slightly more content. There is another strategy for traders who know and are comfortable writing options since both indices are likely to remain here for some time. One can write Call and Put option of same strike of say 12100 (delta neutral strategy) or sell one Put of 12100 and Sell one call of 12250 (since CMP is at 12165). Both will give gain if Nifty hovers around 12100.
All the best. Happy trading.