Market tests Positive- Bears quarantined

Markets regained control after pausing in the previous week where Nifty formed a bullish candle on the weekly scale. The Nifty index respected its rising trend line connecting all the lows starting with 7,511. The immediate support of this rising trend line is currently placed around 9,800 levels. Now, as long as Nifty respects its rising trend line, we can expect the ongoing rally to continue. Although the immediate resistance of 61.8% retracement of the entire fall is placed at 10,450 levels which are still acting as an immediate hurdle. Above this, the up move may extend further towards 10,600 levels.

Nifty also reclaimed all its short term moving averages where major support of 100-DEMA is currently placed at 10,035 levels. The momentum indicators and oscillators are very well in the buy mode on a weekly scale which hints that bulls are tightening the grip and current pullback is likely to extend further.

The volatility index IndiaVIX fell by 3% and slipped below 30 levels. Due to the fall from higher levels, it has formed a gravestone of Doji candlestick pattern on the weekly scale which hints of some consolidation. It is hovering in the range of 26-35 from the past one month, which is giving comforts to the bulls.

In the coming week, we have F&O expiry for the June series. The options data indicates that the maximum open interest on the put side is still placed at 9,500 strikes. We have also seen fresh put writing at 10,000 strikes which has the second-highest open interest and also likely to act as a major support in the coming week.

The maximum open interest on the call side is placed at 10,500 strikes followed by 11,000. So the overall option data indicates that the bulls are having the upper hand and Nifty may trade in a broader range of 10,000-10,500.

Author: Mr.Nilesh Ramesh Jain, Derivative and Technical Analyst (Investment Services), 20th June 2020


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