IGI Logo

Below View On Rollover Note by Mr. Chandan Taparia, Head - Technical & Derivatives Research at Motilal Oswal Financial Services.

Nifty index has been consolidating in between 17777 to 18250 zones from the last twenty trading sessions where declines are being bought but follow up activities is missing at higher levels. It made four attempts to get a range breakout on higher side in the last five weeks but absence of buying interest was taking it back to 17777-17850 zones. It failed to surpass its falling supply trend line by connecting its higher peaks of 18887, 18696 and 18201 zones. Nifty needs to hold 17777 zones for any kind of bounce back and relief in market sentiment after the recent price structure. It concluded the January expiry with losses of 1.64% and corrected by around 300 points on expiry to expiry closing basis from 18191 to 17891 levels and formed a Bearish candle (expiry to expiry chart). The open interest activity in Nifty decreased by 9.23% in the series with a price fall by 1.64% on an expiry-to-expiry basis. Rollover of Nifty stood at 79.2%, which is slightly lower than its quarterly average of 80.1%. In line Rollover data and slight lower roll cost suggests that meaningful declines could be bought but market range can shift lower with capped upside after the recent price development.

Bank Nifty underperformed the Nifty index in this series as it corrected by 1600 points from 43252 to 41647 zones. Bank Nifty which was consolidating in a range have witnessed a sharp decline in the last two trading sessions and corrected by 1500 points from higher levels. It closed at lowest levels of last 50 trading sessions. It has recently taken a setback which is giving some concern to the Indian market ahead of the Union Budget 2023. Long liquidation was seen in the January series as open interest decreased by 12.31% and price was down by 3.71% on an expiry-to-expiry basis. Rollover in Bank Nifty stood at 84%, which is lower than its quarterly average of 86.2%. It has major support near to 41500 zones and a hold below it could take this index towards 40800 and 40500 zones while resistance exists at 42222 zones.

Above views are of the author and not of the website kindly read disclaimer