Options data hints at consolidation in the index, but midcaps continue outperformance

During last week, Nifty resisted around the previous swing high of 18880 and witnessed some pullback in the last couple of sessions. The indices traded in a narrow range in Monday’s session, but the broader market momentum was positive as stock-specific buying interest was seen.

In this series, we have not seen any significant build-up in the index futures segment as both FII and the Clients have traded with long positions of around 50 percent for the most part of the series. The Nifty index attempted to mark a new record high but just missed to make the headline while the Bank Nifty index has consolidated within a range which seems to be a time-wise corrective phase. In the last two sessions, the momentum was missing in the indices but the midcaps witnessed decent outperformance on Monday due to which the overall market breadth was healthy. The Nifty index is trading around its crucial support for 18650 and it needs to be seen if it manages to resume the uptrend from this support. The momentum readings which were in the overbought zone during last week have cooled off in the last couple of sessions and since the buying interest still continues, we could see a resumption of the up move in the near term. Hence, traders are advised to trade with the trend and keep a tab on the support of 18650. A close below this support would then lead to some price-wise correction while if this support remains intact, then a pullback again towards 18670-18730 could be seen. The open interest data indicates support in the range of 18700-18600 while resistance is seen around 18800. Any winding in the open interest on either side could then lead to some trended move around the expiry. 

The immediate resistance for the banking index is seen around 43900-44000 and a breakout above the same will lead to a resumption of the uptrend. The Midcap stocks seem to be gaining back momentum as the RSI oscillator has cooled off from the highs. The 20 DEMA around 34500 is intact in the Nifty Midcap 100 index and till the support holds, one should look to trade in the direction of the trend.