“The short-term trend nevertheless remains down. Momentum readings like the 14-day RSI too remain in decline mode after dropping sharply from overbought levels last Wednesday. This calls for caution in the near term. Nifty would need to cross the recent highs of 21,593 to reverse the current downtrend. Crucial supports to watch for re-emergence of weakness are at 21,329-21,232,” Subash Gangadharan of HDFC Securities said.
OI data showed that on the call side, the highest OI was observed at 22,000, followed by 21,500 strike prices while on the put side, the highest OI was at 21,300 strike price.
What should traders do? Here’s what analysts said:
Rupak De, LKP Securities
The sentiment remains optimistic as the index stays above critical moving averages. At 21,500, there could be significant immediate resistance. A decisive breakout beyond this level could potentially propel the index into a substantial rally. Until then, the index is expected to remain within the range of 21,300 and 21,500.
Ajit Mishra, Religare Broking
We have reached closer to the hurdle of 21,500 in Nifty and need support from the banking index to make a serious attempt for trend resumption else profit taking would resume. Amid all this, traders should avoid aggressive trades in the index and stay focused on identifying opportunities on the stock-specific front. We reiterate our preference for defensive viz. Pharma and FMCG for long trades and suggest picking selectively from others. (You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)