The markets corrected sharply and ended with heavy losses on Wednesday - HDFC Securities
LONG UNWINDING WAS SEEN IN THE NIFTY & BANK NIFTY FUTURES
* The markets corrected sharply and ended with heavy losses on Wednesday. The Nifty, after opening above 13,100 level, succumbed to profit selling and ended near 12,850 mark. PSU banks advanced amid a broader market selloff.
* The Sensex hit a record high of 44,825.37 while Nifty scaled fresh high of 13,145.85 in early deals yesterday. The Nifty rose 2.22% in the past three sessions. The Nifty 50 index fell 196.75 points or 1.51% at 12,858.40.
* Long unwinding was seen in Nifty Futures’ where Open Interest fell by 2.61% with Nifty falling by 1.51%.
* Bank Nifty futures also saw Long unwinding as we have seen 7.84% fall in the Open Interest with Bank Nifty falling by 1.80%.
* Nifty Open Interest Put Call ratio fell sharply to 1.27 levels from 1.78 levels as traders have exited from 12900 – 13000 Put options.
Amongst the Nifty options (26-Nov Expiry), Call writing was seen 12900 - 13100 levels, Indicating 13000 level will act as a strong resistance going forward (maximum OI outstanding, Near strike price). On the lower side, support is seen around 12800 levels where we have seen maximum outstanding Put options.
To Sum It Up, Long unwinding in the Nifty and Bank Nifty Futures & fall in the Nifty Open Interest Put Call ratio on the back of Call writing at 12900 - 13100 levels Indicates that one should be cautious for the markets. Therefore, our advise is to be bearish and use any pullback rally to build fresh short positions with the stoploss of 13000 levels.
On the lower side support is seen around 12800 level where Puts have been written. In the Bank Nifty, our advice is to remain bearish with stop loss of 30000 levels. On the lower side, support is seen in the vicinity of 29250 - 29000 levels
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