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Nifty outlook:

After getting rejected twice at our turnaround point of17220 yesterday, bears gave up, leading to a vertical rise by over 180 points. This makes the test of 17500 a formality today. While 17750 is truly a congestion region worthy of forcing a turn lower on the first test, weekly charts look even stronger encouraging us to move the near term objective higher to 18100. Alternatively,expect volatility to resurface if unable to breach the 17560 region after the opening burst.  

Derivative

Nifty weekly contract has highest open interest at 17750 for Calls and 17300 for Puts while monthly contracts have highest open interest at 17900 for Calls and 16000 for Puts. Highest new OI addition was seen at 17500 for Calls and 17000 for Puts in weekly and at 18000 for Calls and 16500 for Puts in monthly contracts. FIIs increased their future index long position holdings by -6.40%, increased future index shorts by 1.46% and in index options by 1.37% in Call longs, -2.08% in Call short, 16.97% in Put longs and 1.15% in Put shorts.

USD INR Outlook

While a pull back higher was the favoured view for yesterday, the extent of the move surprised us. Now, having retraced 50% of the fall from the peak, a consolidation or a brief corrective downside to 79.2 is expected. Further resistance up is seen at 79.5.