By Ravi Singh
In the previous week, the Nifty reached a high of 24,089 but experienced a sharp decline, closing the week with a loss of approximately 2.5%. This week the bearish sentiment is likely to persist, with ‘sell on rise’ being the preferred strategy. Traders can maintain a bearish stance, anticipating further downside.
Currently, the highest Open Interest (OI) in Nifty’s January weekly options is concentrated at 23500 CE with approximately 9.7 million contracts and 23,000 PE with 7 million contracts. In terms of market flows for January, Foreign Institutional Investors (FIIs) have been net sellers, reducing their positions by Rs 26,250 crore, while Domestic Institutional Investors (DIIs) have been net buyers, increasing their positions by Rs 32,281 crore.
Following a similar trend, Bank Nifty also experienced a sharp decline after testing its resistance around the 51,000 level, resulting in a loss of approximately 4.42% by the end of the week. For the January month, OI is concentrated at the 50000 call and 48,000 put strikes. Specifically, the 50,000 call option has an OI of approximately 1.94 million contracts, while the 48,000 put option stands at around 1.3 million contracts. The 48900 is acting as an immediate hurdle for any upside.
Also Read 6 reasons FIIs are selling Indian stocks like there’s no tomorrow… Nifty outlook remains negative for the upcoming week with a “Sell on Rise” strategy, says Religare Broking Market outlook: Nifty and Bank Nifty face negative sentiment amid weak liquidity and key data points, says Ravi Singh of Religare Broking Nifty to repeat historical trends, possibility of low volumes and lacklustre moves, says Geojit Financial Key Levels to Watch:
For Nifty, the bias remains “SELL ON RISE” for the weekly expiry of the January series, as long as the index trades below the 24000-24200 range on a spot basis. Strong resistance is expected in the 23,300-23,500 zone, while immediate support is likely around the 23,050-22,800 levels. Thus, the anticipated trading range for Nifty during the January series is between 22,700 to 23,700.
For Bank Nifty, significant resistance is anticipated around the 48,900-49,400 levels, while immediate support is likely between 48,400-48,000. The index is expected to trade within a broader range of 47,700 – 49,500 during the January series.
Strategy for the week: Nifty short strangle
Sell Nifty Put 23000 @ 30
Sell Nifty Call 23500 @ 20
Spread 50 Stoploss 82 Target 5 (Expiry January 16)
(Ravi Singh is the Senior Vice President of Retail Research at Religare Broking Limited.
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