Nifty started the New Year with a positive bias

Nifty started the New Year marginally positive and traded with a positive bias. The intraday decline in the later half witnessed buying interest as the market breadth was positive, and the index ended the day around 18200 with gains of about half a percent.

The recent rollover data hinted at positive rollovers in the indices, but FIIs have been a bit cautious on the markets for the last couple of weeks. They rolled long positions in the index futures segment during expiry but formed some short positions in Friday’s sessions, and their ‘Long Short Ratio’ at the end of the week was around 50 percent indicating a neutral bias on the index. In Monday’s session, Nifty mostly traded within a range with a positive bias, but the market breadth was positive indicating some buying interest in the broader markets. In the later part of December, the markets had seen a corrective phase in which the Nifty retraced its previous upmove by 50 percent while the Bank Nifty index retraced by 38.2 percent. Both the indices have seen a pullback move from their retracement supports in the last week and the momentum readings have now given a positive crossover, indicating that short-term momentum has turned positive again. In the options segment, the open interest data on the call options side is scattered while 18000 put options have decent open interest built up.

Now Nifty needs a breakout above 18265 which is last week’s high and the 20-day EMA. Above this hurdle, the index could witness momentum towards 18330 and 18460. On the flip side, 18080 and 18000 would be seen as immediate short-term supports. Although we may not see a significant directional move in the index in the near term, stock-specific moves could provide good trading opportunities and hence traders should capitalize on the same.