Traders advised to have 'wait-and-watch approach'

Weekly F&O Data Analysis

Derivatives - FnO
by 5paisa Research Team Last Updated: 2022-11-22T10:42:06+05:30


Nifty50 21.11.22.jpeg

The negativity in the Asian markets led to a weak opening in Nifty, which started the week below the 18250 mark. The index corrected in the first half an hour and then consolidated within a narrow range throughout the day to end a tad above 18150 with a loss of eight-tenths of a percent.

Last week, our markets consolidated within a narrow range, and rangebound trading continued following the week's negative opening. The market breadth was negative, which indicates a lack of stock-specific participation too. However, the banking index relatively outperformed the benchmark index.

The momentum oscillator on the daily chart of Nifty has given a negative crossover, indicating a lack of momentum; however, the index has crucial support around 18000 as it marks the 20 DEMA and the recent swing low support. In the derivatives segment, the longs formed in the November series are still intact and with monthly expiry nearing, it would be crucial to watch whether traders roll over their long positions to the next series going ahead.

FII’s have about 62 percent of the positions in the index futures on the long side, while clients too have been riding this trend with 57 percent of long positions. Along with the rollover data, it will be crucial to see if the Nifty index holds on to its crucial support of 18000. Till this support is intact, this recent consolidation could be seen as a time-wise correction within a short-term uptrend. But the market breadth is not improving, as some of the sectors, including the midcap index, have shown divergence and lackluster movement.

For this divergence to end, the midcap space and the broader markets should witness buying interest, and if that does not happen, then it could be a setback for the benchmark as well.

Hence, at the current juncture, it is better to be on the sidelines and have a wait-and-watch approach. Once the broader markets and the benchmark gets in sync with each other in either direction, it will give more clarity for directional traders. The immediate supports for Nifty are placed around 18080 and 17970 while resistances are seen around 18260 and 18330.

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Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Disclaimer

Investment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.

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