Aggressive Selling of Puts in Nifty and Bank Nifty

Nifty and Bank Nifty Price Forecast: On Friday, prices rose sharply and the futures open interest dropped significantly in Nifty and somewhat in Bank Nifty, indicating a rally driven by short-covering. The put-call ratio on the monthly series increased in both Nifty and Bank Nifty due to aggressive put shorting. This action is expected to continue, providing enough fuel for rally attempts during the truncated week ahead.

We can see that 165 out of 191 stocks on the F&O list are present in the bulls list, compared to just 26 in the bears list, indicating a sudden shift toward the upside. This number was almost the opposite the previous week, so tracking the changes at the daily level vs the weekly level during the upcoming week will give an idea of whether the trends are strengthening or falling off.

For the bulls to take charge, the indices need to continue past last week’s high to take on the option players at 17,500, which should not be too much of a problem. The prices can then reach towards 17,630, where the next gap zone lies, and continue beyond this to open up room till 17,775 area. On the lower side, the gap zone extending from 17,250-17,100 should provide the support zone for buying into dips in the coming week.

Reliance Reversing its Decline

The banks and other heavies are expected to help the bulls, with Reliance reversing its decline and expected to add about 4-5% to its current levels. The entire banking pack (private and public sector) seems ready to battle for the bulls. If they come through, then the Nifty can achieve its higher levels quite comfortably. The other sector leaders seem to be just about waking up. If they improve, then the odds for continued rise of Nifty seems quite likely.

The first of the helping hand needs to come from the US, and much of Friday’s positivity came out of the US news and moves. Since we are well aligned with the US market trends, we can continue to track their gains in the coming week as well.


The Nasdaq has become the best performer in this calendar year among all indices, and if this continues, then it can still succeed in dragging out tech guys higher. But most likely, the market will wait for the first slew of results from these names before deciding on their course ahead.

Participants are concerned about punctured portfolios (of mid and small caps), but there are some possibilities of revival if the rise were to keep up this month. Results trigger here will take time, and until then, all we need is for the index to hold on and not turn negative.

Bullish Trends

Overall, be bullish biased this week and use intra-week dips to buy. The market is expected to maintain bullish trends until around April 19 or so. It’s time to shed the tentativeness of the past month or two.

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