Market to remain in consolidation mode between 17000-17500

The global markets witnessed a sharp correction in Friday’s session, which had an impact on the opening of our markets too. However, Nifty did not see any follow-up selling and the indices recovered some of the losses from the lows to end Monday’s session a tad below 17250.

During last week, Nifty recovered from its support zone of ‘200 DEMA’ and rallied towards the 17400-17500 range. However, both the Nifty as well as the Bank Nifty index resisted around the 50 percent retracement level of the recent corrective move and gave up some of the gains. Now if we look at the derivatives data, we have seen the formation of mixed positions in the indices.

FIIs started the October series with short positions and continued to hold the majority of positions on the short side. Currently, their ‘Long Short Ratio’ is only 18 percent. They have been net sellers in the last couple of sessions in the cash segment too. On the other hand, the client section has been trading with a positive bias and has about 70 percent of their positions in the index futures segment on the long side.

If we look at the options data, the 17000 put option has a decent open interest, indicating an immediate support level, while concentration is seen in 17400 and 17500 call options, which seem to be the resistance zone. Thus, it seems that the market is currently in a consolidation phase with 17000-17500 being the trading range and a breakout beyond this same will lead to the next directional move. Thus, traders should look to trade with a stock-specific approach from a near-term perspective. Along with this data, traders should also keep a close tab on factors such as bond yields, the Dollar Index, global market movement, and corporate earnings, which are likely to impact the near-term direction.