Nifty: Time to stay cautious

2021年9月20日

Nifty
CMP 17594

- Nifty has fallen in the last 2 trading sessions
- however today it just re-tested the previous consolidation zone
- further weakness might creep in only if we see this yellow zone being taken out.

- On the upside on hourly chart Nifty formed a doji with a Open at 17751 and close at 17756
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Given the set up
One may consider a Bear Call Spread strategy in Nifty
Consider to sell 30 Sept expiry 17700 Call Option currently around 114
&
Buy 30 Sept expiry 17900 Call option around 56

Net receivables Rs 2900/- per lot (yield potential on margin required for strategy approximately 11% till expiry)
More importantly, strategy has an Inbuilt protection for a rise in Nifty price up to 17758 till expiry
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Our morning commentary before markets opened,

Friday's F&O Data Analysis
Index Futures Open Interest has come down by 3.59% which suggests squaring off of positions has happened at higher levels on Friday.

Retail traders exited Long positions in Index Futures
However in Options they were Net Call Buyers and Net Put Sellers
(which suggests they have Bullish bias)

FIIs were Net Index Futures buyers and in Options were both Net Call and Put Buyers (Bullish to Neutral)

Proprietary traders exited in Index Long Futures &
in Options were Net Call sellers and Net Put Buyers
(Bearish bias)

Markets look likely to gap down around 150 points and this scenario would favor the Positions of Proprietary traders the most

Those who have short position can continue to hold.

For any fresh new position it would be advisable to wait for some time, observe how market responds to gap down and then take the next step.

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In the morning trade, the situation was favourable to Prop traders
- now with the recovery Index has recovered and is at aide to FIIs who had a neutral position ( remember they were net long in index futures)
(they might look to exit)

Will it rally further to favor the retail traders???

Only time will tell

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Time to stay cautious
Happy & safe trading...!!!✌🏻