Buying seen in FIIs & DIIs camp; diminishing distribution day count acts as good sign for bulls!
Wednesday turned out to be a wonderful day of trade for the markets with Nifty registering gains of over 2 per cent and ending the session above the 15,200 mark.
After witnessing a sensational start to the day, the bulls maintained their charge on D-Street throughout the day, helping Nifty hit a triple century. Nearly one-third of the mammoth gains were seen in the last leg of the trade itself, which was due to strong move seen by the blue-eyed boy of D-Street i.e., Reliance Industries. Reliance Industries emerged as the top index contributor, followed by HDFC and ICICI Bank. Interestingly, both the institutions were net buyers during Wednesday’s trade with FIIs buying Rs 2,088.70 crore while DIIs bought Rs 392.91 crore.
India VIX fell by another 6.4 per cent and has settled around 22 levels. The volatility index has seen a drop of nearly 22 per cent from 28.14 to 22.09 levels. A cooldown in volatility from higher levels has aided this surprising rally of nearly 630 points in the last three days.
The price action of the day has formed a sizeable bullish candle on the daily chart and with this, Nifty filled the gap area of February 26 and closed above the formation of a new lower top of February 25. Considering these factors, it is clear that the implication of the bearish island reversal pattern has negated, and one may expect a continuation of the upmove in the near term.
Nifty has reclaimed its important short-term moving average i.e., 20-DMA and currently, it is trading above its 20-DMA by 1.52 per cent and interestingly, the 20-DMA has started to trend upwards. Along with this, on Wednesday, one more distribution day expired due to aging. With this, the total distribution day count has decreased to three. Further, another distribution day is due to expire this Friday.
Diminishing distribution day count is a good sign. We have weekly options expiry due on Thursday and the trend for the day would be profoundly influenced by the weekly options expiry. As per the options data, the 15,000 levels have become a crucial support level as more than 50 lakh shares were added in the open interest on Wednesday itself. Further, the maximum put OI stays at this strike price itself as the 20-DMA is placed around this level. It is going to be an interesting weekly option expiry as bias continues to be bullish with immediate resistance seen at 15,340 levels, followed by 15,450.
Another important point that comes to notice with the sharp upmove of the last three trading sessions is that the index has surpassed and closed above the prior week high. Also, the closing high on the index was seen at 15,314 and we are within the striking distance from this level. Hence, we may see a new closing high on the index.
The +DMI has crossed above the -DMI, which is a positive sign and echoes the bullish stance. Hence, bullish bets are likely to be the theme for the day.