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Nifty F&O Strategy: Look for fresh longs if Nifty crosses 18,400, says ICICI Direct


Technique Positions:
Purchase one lot Nifty January 25 Future at 17,993, purchase one lot January 25 17,800 put at 245 & Promote one lot of 18,400 Name at 139.


Rationale

  • International equities witnessed some revenue taking after the FOMC meet final week and Nifty additionally gave away many of the positive aspects and closed the week with close to 1% losses. Nevertheless, broader markets did comparatively higher and the small cap index closed the week in inexperienced. Going forward we count on ranges close to 18,000-18,200 to behave as fast assist ranges and count on restoration in the direction of recent highs within the coming week.
  • From the choices entrance, sharp decline put up Fed meet has resulted in heavy Name writing at ATM and OTM strikes. Whereas the put base is at ATM 18,300 strike, Name bases are a lot stronger at 18,400 and better strikes. Therefore, a transfer above 18,400 ought to be regarded for recent longs within the index.
  • The priority relating to excessive premium and low volatility has subsided considerably as Nifty premium has declined from the highs of close to 130 to simply 50 factors. FIIs web longs have come down sharply from over 1 lac contracts at inception of the collection to simply 12,000 contracts because of recent quick construct up. However, Volatility index has additionally moved in the direction of 14 ranges offering some consolation.
  • The current weak point within the markets is triggered by weak world cues. Traditionally, we now have seen Indian markets witnessing some optimistic flows within the second half of December. Therefore, we imagine as an alternative of sector particular, heavyweights throughout the sectors could carry out in market restoration.
  • Retaining the view of rebound out there we really feel merchants ought to take protected methods like collar methods the place threat can be restricted.

(The creator, Raj Deepak Singh is Head – F&O of ICICIdirect Analysis.)

(Disclaimer: Suggestions, ideas, views and opinions given by the consultants are their very own. These don’t symbolize the views of Financial Occasions)



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