By Anand James
With more than 67% of stock futures attracting long build up in the expiry week, and FIIs holding more than 25% of the market wide long positions in index futures, we are certainly going into the week long heavy. This prompts us to take a defensive after achieving the 18,660 objective, which we had set out with last week. In order to let profits run in the face of potential rejection trades, as we come closer to the record peak for the first time in five months, it would be prudent to keep the downside marker at 18,430.
Major reason for the lag is because Bank Nifty had already reached within touching distance of record peak a week before itself, thus rendering a different trading dynamics when compared with Nifty, which, despite a stellar last week, still has more than 2% wriggle room to build up more steam, before it meets the record peak. Secondly, NSE Nifty 50 is more of a broad based index as opposed to a thematic Nifty Bank index, allowing Nifty to find several winners turn by turn keeping the index’s momentum up.
This is precisely what happened with Nifty last week, with Adani group stocks leading the surge first, followed by Reliance Industries as well as IT and metal stocks later. Having said that, Bank Nifty traders are assured of a wider trading range next week, with prospects of 44,600 emerging, should 44,150 be conquered. Alternatively, inability to scale this peak or direct fall below 43,830 could call for 43,250, but a collapse is less anticipated.
(Anand James,Chief Market Strategist, Geojit Financial Services. Views expressed are author’s own. Please consult your financial advisor before investing.)