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Nifty: Positive bias remains with support near 17100.

* The Nifty remained almost flat in the absence of any major flows. However, Indian indices continued to outperform almost every other index. While European and US indices turned negative in the week, so far, Indian markets remained positive with midcap and small cap indices gaining almost 1% and 2%, respectively

* From a futures perspective, Nifty open interest continues to rise while current OI of almost 1.6 crore shares remains on the higher side. At the same time, FIIs’ net longs have also remained intact near 60000 contracts suggesting ongoing positive bias. Hence, till we do not see closure of positions, buy on declines strategy should continue

* The volatility index subsided last week as the Nifty consolidated in a narrow range and India VIX closed at its lowest levels seen in the month below 14 levels. Looking at the options base, the Nifty has the highest OI concentration at ATM 17400 Call strike. A move above this level is crucial for a fresh uptrend. On downsides, we believe 17100 is will remain as important support in the current consolidation

* Sectorally, we believe banking would lead from here onwards while technology stocks may see further consolidation after significant outperformance of the last couple of months. At the same time, metal, PSU stocks may witness further gains in the coming sessions

Bank Nifty: Should hold 36000 levels for upsides to continue

* The Nifty traded in a tight range last week amid high volatility where stock specific action was seen. As broad based buying was absent, sectoral rotation was clearly visible where banking stocks witnessed marginal outperformance and the index managed to close above 36000 levels after sharp whipsaws

* Among private banks, Kotak Mahindra Bank outperformed whereas midcap banks also did better. PSU banks saw closure in writing Call OI positions indicating some positive trend in PSU banks in coming days

* For the coming week, trading range for the index is likely to expand as highest Put base remain intact at 36000 but the highest Call base has moved higher and is placed at the 37500 strike. We feel the bias remains positive and any dips towards its highest Put base would be an opportunity to create fresh long positions

* The current price ratio of Bank Nifty/Nifty has moved towards its yearly low levels. We feel some bounce could be seen from support levels due to which we may see outperformance in banking stocks. Volatility index remained muted near 14.5 levels. Once we see any directional move in volatility, broader indices would also catch the direction in coming weeks

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