By Anand JamesWhere are We The Nifty is within touching distance of the 100 DMA of 10,958, having surged 4.7 per cent in November, or over 7 per cent for futures on expiry-to-expiry basis.
This rally has now retraced 50 per cent of the Aug-Oct fall that had initially put the long-term uptrend in doubt.
The last leg of the November rally was aided by surge in banking stocks on the expiry day, spiking Nifty Bank’s OI, while lifting Nifty rollovers above 70 per cent from sub-6 month averages prevailing until the last day.
Fall in oil prices and rise in rupee were central to November’s positive theme, while FII flows turning positive also helped the momentum. What is in Store Straddles are pricing in a 400-point trading range, which is not unusual given the several event risks lined up ahead. The 100 DMA of 10,958 should prompt a pause or a turn lower, but such dips are less expected to slip beyond 10,750/600, for now.
The options volatility skew projects a nearterm objective of 11,500, with interim technical resistance levels of 11,065 and 11,150. What you Could Do: Prepare for a wider trading range.
The midcap index hints at coming out of the subdued ranges, and see strong moves.
Banks are likely to make larger strides, but are best played on dips initially.