#GetSmartWithKEEV Newsletter Vol 2: Insights on Index for the upcoming week

#GetSmartWithKEEV Newsletter Vol 2: Insights on Index for the upcoming week



"The best time to buy is when there's blood in the streets."
                                                                            - Baron Rothschild

Index Insights: KEEV

Key highlights of the week:

  • The markets after a consolidation phase is seeing a strong bull run.
  • Equity mutual funds' inflow drops 76% to Rs 2,258 crore in November.
  • Monthly SIP flows top Rs 17,000 crore mark.
  • RBI MPC Meeting: Repo rate unchanged at 6.5% with 'withdrawal of accommodation'.

Nifty Analysis


The chart above shows a good upward momentum from near 18800 levels then a consolidation around 19875 levels followed by a strong resistance breakout, the OI data given shows strong Put OI at 20900 levels, corresponding with the good upward momentum on chart, 20900 is also the highest Put OI, meaning the put option writers are not expecting Nifty to close below 20900 for this expiry at least. A clear chart trend is visible, showing a bullish sentiment on charts but the same is not supported by the OI data which shows a small range of 20900-21000 (Max Put OI and Call OI), which may be broken this expiry if the spot moves outside the range mentioned. The index has also confirmed an important breakout from near 19875, if maintained then can see a short reversal from these levels again.

It is important to note that the Call and Put sellers don't have a similar OI structure, the put sellers are more active, indicating a bullish expiry if these levels are breached but 21000 is an important psychological level.

Banknifty Analysis



The chart above, when compared to Nifty exhibits a similar structure, its a downtrend followed by a period of reversal. Also, it does confirm the breakout from an important resistance near 44800 and 44900 levels. Notably, 47000 shows highest Put OI as seen in the open interest chart. The OI range is currently large, (47000-49000) indicating volatility is to be expected if the mentioned levels are broken. The 47500 Calls and Puts saw a significant increase in the last couple of hours of trading on Friday. Additionally, on chart it can be seen that the short term trend is bullish and the price looks to be set, to run through the important level of 48000 for trend continuation.

 
Analysis provided by:
   Rutveek Shah


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