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Nifty: Support placed near 15550 in current uptrend

* The Nifty continued to trade higher amid significant outperformance from broader markets. While the Nifty gained less than 1% last week, midcap and small cap indices gained more than 3% during the week. Even in the Nifty, apart from select heavyweights from technology space, most heavyweights remained range bound while PSU heavyweights performed

* We believe that participation from index heavyweights will be crucial for continuance of the up move. While banking heavyweights remained unchanged in the last two weeks, technology stocks have taken the lead in the last one week. However, since most heavyweights are trading near their highest Call bases, further consolidation cannot be ruled out. In such a scenario, one should keep a stop loss near 15600 levels to play the ongoing momentum

* On the options front, the highest option concentration is placed at 15800 Call and 15700 Put strikes with more than 30 lakh shares each and combined premium of | 150. The current OI is significantly lower compared to the last few weeks as volatility has declined significantly and risk aversion is visible among option writers. Hence, positive bias can continue with stop loss near | 15550

* The volatility index declined further and moved below 15 levels, which is the lowest level since February 2020. With the upcoming FOMC meet during the week, a round of upsides in the volatility index cannot be ruled out. Such low levels also suggest some caution in the market, which may result in extended consolidation in the index

Bank Nifty: Fresh momentum likely above 35500 levels

* The banking index significantly underperformed the broad markets and ended the week negative. Moreover, it was the only sectoral index, which closed the week negative. While PSU stocks continue to perform, it was primarily private sector banking heavyweights, which have struggled to find further momentum

* From an options perspective, the banking index continued to witness significant writing at 35500 and 36000 Call strikes for the weekly as well as monthly settlement suggesting limited upsides in the short-term. We believe that a close above 35500 on a closing basis may provide fresh momentum in banking stocks. On the lower side, Put base is placed at 35000 and 34500 strikes suggesting immediate support for the Bank Nifty

* Among private leaders, the highest Call base for HDFC Bank is 1500 strike, for Kotak Mahindra Bank it is 1800 Call strike and for Axis Bank at the 750 strike. Thus, these levels will remain crucial in the short-term. Only a move above these levels may trigger continued momentum, which may take the banking index higher

* The Bank Nifty/Nifty price ratio has immediate support near 2.19 levels. We do not expect this ratio to decline below these levels. Hence, underperformance of the banking index may not be seen below these levels

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