Nifty hovers around 15,900 mark; Call writers spotted writing call options aggressively between 15,900-16,000 strike price!
Market Update at 2:09 PM: The markets looked promising after it managed to decisively close above the broad range, in which, it was seen trading since the last one month. However, the momentum seems to run out on Friday as bulls have been gripped by Friday fever as the market participants preferred to book profits off the table, ahead of the weekend. Nifty had slipped below 15,900 but now, it is seen hovering around this important psychological mark.
Options data does point out that the 15,900-16,000 is likely to act as a crucial barrier for the index in the near term as nearly 59 lakh shares combinedly have been added in between 15,900-16,000 call strikes.
Market Update at 11:45 AM: After opening the last trading session of the week with a fresh all-time high, Nifty made a high of 15,962.25. However, soon after that, it's seen moving in a very narrow range as it slipped below the neutral line.
Nifty is trading down by 3 points at the 15,920 level. The advance-decline stands at 27 advances with 22 declines. Meanwhile, the action continues in the broader market with Nifty Midcap 100 and Smallcap 100 gaining 0.17 per cent and 0.59 per cent, respectively.
Among the sectoral indices, Nifty Pharma and Nifty Metal emerged as the top gainers while on the flip side, Nifty IT was the top loser as profit booking was seen after two days of ferocious rally.
On the options' front, the 16,000 Call option has seen the addition of over 22 lakh shares in the open interest while the maximum concentration of OI on the call side stands at 16,000. Hence, 16,000 is a key level to watch out for on the upside.
Nifty closed above the multiple parallel highs of the recent past. It closed at a new lifetime high. It gained 196.3 points or 1.25 per cent in the last five trading sessions and settled at 15,924.2. This low volume breakout will have a low probability of success.
Nifty opened on a positive note and broke out of the flat base after the first half an hour of trading. This decisive, strong bullish candle has put an end to wavering moves. It closed above the upper Bollinger band and also, above the upward resistance.
As we had mentioned earlier, if the test of resistance occurs more than six times, it results in a breakout. This is what exactly happened on Thursday. Now, it needs to register a follow-through day with closing above Thursday's high or in positive territory. The RSI moved above the prior swing high and broke the double bottom pattern, which is a positive sign for the market. In any case, if the follow-through day turns into reality on Friday, the MACD is likely to give a fresh buy signal. The weekly candle moved above the previous week's high.
A weekly closing above the 15,915 level after five weeks of tight consolidation is a big positive for the market. The broader market participation is another good indication of a bullish trend. As the 22 day-tight consolidations have broken; expect a sharp move on the upside towards 16,200 and above. However, as Nifty declined in the last hour, it’s giving a sense of profit booking at higher levels. Though it closed above the prior swing highs, the sharper move is missing.
For now, be with a positive bias as long as it makes higher highs. In any case, if it slips below the prior day low or fails to sustain above the 15,900 mark, we need to be cautious on the long positions.