This week, there are big FMCG Q3 numbers lined up which could have a bearing on sentiment. In terms of global cues, India is expected to be impacted by Fed talk, which has so far been quite hawkish.
January 19, 2023 / 08:25 AM IST
If Nifty falls below 18,000, selling could accelerate as put writers try to make up for their losses by going short themselves.
The market is currently at crossroads, with the Nifty index sitting in a “make or break” zone. With the weekly expiry happening today, volatility is likely to be high. However, the Nifty and Bank Nifty had a good follow-up yesterday. HDFC Bank, in particular, has shown signs of leadership and is currently within 5% of its 52-week high. From January 10th to today, HDFC Bank has seen a 4.4% increase in value while ICICI has seen a 1% increase.
This week, there are big FMCG Q3 numbers lined up which could have a bearing on sentiment. In terms of global cues, India is expected to be impacted by Fed talk, which has so far been quite hawkish. However, the market has called the bluff of the Fed and believes that the terminal rate is near. Nasdaq stocks are still outperforming in the US, and Indian IT stocks still have room for a rally. The China opening theme on metals is also expected to continue. The only global risk factor for India currently is a potential surge in commodity prices.
Looking specifically at the Nifty, there is heavy put writing at 18150, 18100 and 18000 strikes on the Nifty and no major call writing. If Nifty falls below 18,000, selling could accelerate as put writers try to make up for their losses by going short themselves.
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Prima facie, this indicates that the mood is more bullish than bearish, the intermittent corrections notwithstanding. The SGX Nifty is indicating a start around 20 day exponential moving average of 18,090 and today’s texture is “sell on rally” with a stop of 18,200. However, a big rally is likely if the Nifty closes above 18,200.
In terms of the Bank Nifty outlook, HDFC Bank’s price move has changed the texture of the market. The Bank Nifty is still relatively weak, with the 20 DEMA placed at 42,581. The highest Open Interest is at 42,500 Call, and the Bank Nifty is only likely to see strength above 42,600. A big rally on the Bank Nifty is only likely above 42,641.