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Failure to close below 15900 last week, despite a few intraday scares, helped fit the ongoing pattern as a broadening wedge, encouraging us to look for 16800 as the near term objective in an optimistic scenario. This is consistent with our view of the last two weeks. We will begin by eying 16370 for the week, but with an inclination of doubling up on longs should Nifty clear the wall of worry at 16200. Downside marker for this view may be placed at 15970.

DERIVATIVE INSIGHTS: 

Nifty Weekly contract has highest open interest at 16600 for Calls and 16000 for Puts while monthly contracts have highest open interest at 16400 for Calls and 16000 for Puts. Highest new OI addition was seen at 16600 for Calls and 16000 for Puts in weekly and at 16000 for Calls and 15500 for Puts in monthly contracts. FIIs increased their future index long position holdings by 1.30%, increased future index shorts by 4.12% and index options by 32.89% in Call longs, 25.19% in Call short, 33.24% in Put longs and 32.68% in Put shorts.

OUTLOOK – USDINR: 

We had gone into last Friday expecting reversal moves aiming 79.86, followed by 79.58. The second leg of this move is expected to unfold this week, which could even get extended to 79.25, after consolidation initially. Alternatively, pullback above 79.95 will negate the bear move, but we do not expect extended rallies today.