“While we expect further upsides and new life highs in the coming sessions in the run-up to the election results, we remain open to volatile movements in the very near term. It will be important that the Nifty holds above the previous swing highs of 22,795 for the uptrend to continue. Markets are likely to be volatile in the coming sessions as we approach the election result announcements,” said Subash Gangadharan of HDFC Securities.
Analysis of Open Interest (OI) data reveals that the call side exhibited the highest OI at the 23,000 strike price, followed by 23,500 strike prices, whereas on the put side, the highest OI was observed at the 22,500 strike price.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
On the daily charts, we can observe that the Nifty has been consolidating in a narrow range since the last three trading sessions around the 23,000 mark. We expect this consolidation to continue till the expiry of the May series. During this phase, Nifty can retest the breakout zone of 22800 – 22750 and thereafter, resume its up move. On the downside, 22,800 also coincides with the 40-hour moving average which can provide support in case of a dip.
Rupak De, LKP Securities
The index remained within a range as the lack of a breakout on either side failed to provide any directional movement. Significant Call writing was observed at the 23,000 strike price, followed by the 23,100 and 22,900 strikes. In comparison to the heavy Call writing, Put writers were less active, leading to a decline in the PCR. The high India VIX suggests that market volatility might remain elevated.
On the higher end, the 22950-23000 zone might act as a strong resistance, and any rise may attract selling pressure. On the lower end Nifty might drift down towards 22,800/22,600.
Ruchit Jain, Lead Research, 5paisa.com
Since the readings on the lower time frame chart have seen a negative crossover from the above mentioned resistance for Nifty, this could be seen as a correction within an uptrend. The immediate supports for Nifty are placed around 22,800, followed by the 22,650-22,600 range. On the higher side, the hurdle is seen around 23,100 and once this is surpassed, the index could continue the uptrend towards 23,400.
Shrikant Chouhan, Kotak Securities
The current market texture is non-directional. On the downside, 22,800-22,750/74,900-74700 would be the key support zones, while 23,000-23,100/75,500-75,700 could be the crucial resistance areas for the day traders.
For day traders now, buying on dips and sell on rallies would be the ideal strategy. However, below 22,750/74,700 the sentiment could change. Below the same, traders may prefer to exit out from the trading long positions.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)