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US markets have been
in bearish mode for the past few weeks and on Wednesday night they rebounded
sharply from their overbought condition. Being the outperforming market of
late, we were sentimentally looking for a little nudge and a sharp global
recovery provided much-needed impetus to start the session with a decent
bounce. In fact, a small profit booking around the middle of the session was
absorbed with ease. Finally, Nifty ended the weekly decline around the 17800
level by adding one percent to the Bulls Kitty.
This is exactly what we alluded to in our
previous comment, that the 17700 fight will end for Nifty when we get support
from the global peers. We finally managed to close at the 3-week high, which
was the most recent period of consolidation. It is important that this step is
supported by the banking area, which has reached its highest level in the
current calendar year. This participation is certainly considered a healthy
sign for our market. Going forward, we expect Nifty to continue this north move
towards 17,900, 18,000 and then past the 18,000 level. On the upside, if there
is no global divergence, 17700 17600 should now act as immediate support.
Traders are advised to remain bullish and use dips to add new longs.
FIIs were net buyers in the spot market segment of Rs. 2913 crores. At the same
time, they bought Rs. 853 crores worth of index futures with a surge in open
interest indicating a long formation. Looking at the general F&O data, we
observed a long formation in both indices. On the options front, position
buildup is seen on put strikes at 17700-17800, suggesting a gradual shift in
base. On the contrary, there is a significant OI concentration seen at
17800-18000 call strikes, indicating nearby resistance. Once we surpassed this,
we would see some brief cover moves in these strikes.
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