Broader markets witness profit booking post a sharp run up

Nifty started the week on a flat note around 21800, but it traded with a negative bias throughout the day and ended just above 21600 with a loss of three-fourths of a percent.

In the last one week, Nifty had traded in a narrow range but it was unable to surpass the recent swing high of 22127 which the index has resisted twice in last one month. FIIs have been on the short side throughout this series. Although they covered up some of the short positions, still about 65 percent of the positions are on the short side. Short formations were seen in the Bank Nifty index where an open interest increase was noted along with the price correction. In the options segment, writing has been seen in 21700-22000 call options in the weekly series while some unwinding was seen in put options. The broader markets witnessed a sharp correction in Monday’s session which was much expected as post the recent run-up, the technical reading was overbought and had indicated a negative divergence. Such divergences usually lead to corrective phases and thus, we have been witnessing such a correction in broader markets.

Nifty could extend the correction could extend upto its next support which is placed around 21450-21400. Hence, until we see any change in the data or chart structure, we continue with our cautious approach in the markets and advise short-term traders to stay light on positions. On any pullback moves, 21750 and 21830 will be the immediate resistance now.