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Published on 9/12/2019 12:22:33 PM | Source: ICICI Direct

Nifty likely to continue consolidation around 12000 - ICICI Direct

Posted in Market Outlook| #Market Outlook #ICICI Direct

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Nifty likely to continue consolidation around 12000…

* Last two weekly expiries had the highest Call base at 12100, which finally resulted in the market weakness. The Call writers were active at 12100 strike. The index is coming down to crucial support zone of 11800-11850 where the noticeable Put base is placed. We believe the indices may enter a more prolong consolidation around the psychologically important levels of 12000

* As there was no rate cut in the monetary policy, banking stocks have come under pressure. This may be compensated by the outperformance expected from technology heavyweights

* The higher quantum of FIIs selling in last few sessions has put the market under pressure. The uncertainty on the US-China front has led to these jitters

* Market participants are waiting to see whether the US levies tariffs on remaining Chinese imports into the US in mid-December. Any relaxation on that front would be taken as positive by the markets

* Volatility has declined due to higher options writing seen of late, which has kept indices in a range. India VIX has declined from 15% to sub 14%.

 

Bank Nifty: Profit booking may extend towards 31000…

* After outperforming the broader markets, profit booking was seen at higher levels in the Bank Nifty as the Street was expecting a 25 bps rate cut while the RBI maintained status quo • Apart from Kotak Mahindra Bank, most private and PSU banks saw profit booking. Axis Bank and SBI were underperformers whereas midcap banks were no exception and fell sharply

* In the past few days, there are huge additions in 32000 and 32200 Calls, which is likely to keep the index move in check. However, as the Bank Nifty slipped below its sizeable Put base of 31500, the OI shifted lower to 31000 strike, which can be a potential target on the downside

* The current price ratio of Bank Nifty/Nifty has reverted marginally from its monthly high of 2.64 as weekly underperformance was seen in banking stocks. We feel profit booking is likely to extend in Bank Nifty, which will push the ratio towards its support levels of 2.58.

 

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