Market resumes uptrend; IT sector could lead the move

Weekly F&O Data

by 5paisa Research Team Last Updated: Sep 04, 2023 - 05:07 pm 155 Views

Nifty50 04.09.23.jpeg

Our markets consolidated within a range for most part of the August month. However, it has started the September series on an optimistic note and witnessed a recovery led by a broad market participation. Nifty managed to end above 19500, hinting at a resumption of the broader uptrend.

During the month of August, Nifty went through a time-wise corrective phase where it consolidated within a range. However, the broader markets kept the uptrend intact and the Nifty Midcap and the Small Cap index continued to clock new record highs. This is a positive sign as it indicates stock specific  buying interest by market participants. Nifty has managed to take support around 19250 in last week and interestingly, the momentum oscillator has given a buy signs on the index. The rollovers were in line with three month average and the market participants have not rolled their short positions to the September series. Both FIIs and Clients have long positions around 50 percent and the overall open interest base is low this time. Thus, formation of new positions will lead the momentum and looking at the move in last couple of sessions, it seems that the index is geared for the next leg of the upmove. In the options segment, significant put writing has been seen in 19500-19300 strikes and thus, intraday dip should be seen as buying opportunities. On the higher side, we expect the index to rally towards 19650 which would be the important hurdle now, and once this level is surpassed then we could gradually move towards new highs to mark new milestones again.

Amongst the index heavyweights, the IT stocks rallied higher and the Nifty IT gave a breakout above the crucial hurdle of 31650 which was acting as a hurdle since more than a year. Such breakouts shall now lead to a trended phase in the large cap IT names which had relatively underperformed the markets in last few months, and this should lead to positive move in the benchmark as well.

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