By Ruchit Jain
Post registering high of 18888 on 1 December, Nifty has corrected gradually in this series so far. We witnessed unwinding of long positions initially but off late some fresh short formations have dragged the market lower. The news of rising Covid cases in China spooked market participants to unwind long positions in the last couple of sessions. Although the global markets have traded with a positive bias, our markets have shrugged off the global cues and ended a tad above the 18100 mark.
On the other hand, the Client segment has 60 percent positions on the long side. In Options segment, significant open interest is seen in 18500 call option which would be the immediate resistance on upmove while 18000 is the immediate support. Although the data is not much positive, the momentum readings on the lower time frame charts have reached the oversold zone as the index has corrected from 18888 to 18070.
Nifty Outlook
Technically, the index has retraced about 38.2 percent of the recent upmove from 16750 to 18888, and swing low support is around 17970. Below this level, next support would be directly around 17800 mark. Hence, although the data is not optimistic, a pullback move could be seen in the near term from the support zone of 18070-17970. On pullback moves, resistances will be seen around 18300 and 18450-18500 range. Unless we see a change in data, traders are advised to avoid aggressive positions and look to lighten up longs on pullback moves.
(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)