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Being in the distant vicinity of the 16400 target that we had set out with at the start of the week, the question now would be whether there is enough momentum to see extension to 16170.Given the sharp downsides in the closing hour of yesterday, a reactionary pull back is likely initially today. But with VIX rising, volatility expectations are higher, and directional up moves may have to wait until the 16560-600 region is taken out, until which, it is fair to expect sub 16400 levels to close.

Derivatives:

Nifty weekly contract has highest open interest at 16500 for Calls and 16500 for Puts while monthly contracts have highest open interest at 16600 for Calls and 16100 for Puts. Highest new OI addition was seen at 16600 for Calls and 16600 for Puts in weekly and at 17000 for Calls and 16000 for Puts in monthly contracts. FIIs increased their future index long position holdings by -17.63%, increased future index shorts by 0.98% and in index options by 8.55% in Call longs, 5.45% in Call short, 12.14% in Put longs and 0.22% in Put shorts.

USD INR: 

Favoured view expects a pull back to 79.9, followed by a consolidation or a turn lower again to the79.74 vicinity.