Market retraced recent losses

During last, Nifty oscillated within the range of 17470-17250 for the most part of the week. The momentum readings were oversold and the index surpassed the high of this consolidation in Friday’s session. This led to positive momentum and the index rallied in the last couple of sessions to almost test the 17800 mark again. 

The indices have seen a sharp pullback move in the last couple of trading sessions and have retraced some of the recent losses. The major concern seen in the recent corrective phase was the FII’s short positions in the index futures segment where they had around 85 percent of positions on the short side during last week. However, they covered some of their short positions on Friday and their ‘Long Short Ratio’ improved to around 23 percent. This indicates that the stronger hand has started covering their short positions and other data such as up move in global markets and appreciation in INR indicated positive biases for the equities. The momentum readings on both Nifty as well as BankNifty are on the buy side and hence, any declines are likely to witness buying interest. As per the options data, 17500 would be seen as immediate support for this week as the 17500 strikes put option has a decent open interest build. On the higher side, the open interest data is scattered in 17800-18000 strikes which would be seen as the resistance zone.  The immediate support for Nifty is placed in the range of 17600-17500 and traders should look for buying opportunities on declines toward the support range. Technically, the 38.2 percent retracement of the recent correction from an all-time high of 18888 to 17255 is around 17880 which would be the immediate level to expect. However, if the trend continues based on global cues, then in the short term the index could see an up-move towards the 50 percent retracement mark which is placed around 18070.