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This week turned out to be yet another good period for bulls as the markets continued their rally. While the already hit its record high two weeks back, the Nifty was yet to catch up due to its lacking strength.
However, the tide seems to be turning and the index is now showing more strength than Nifty Bank. This week, the large-cap index jumped 1.41% to 18,826, while Nifty Bank showed signs of profit booking and fell 0.12%. Had Nifty Bank given some support, the Nifty 50 would have already hit a new lifetime high by now.
Nonetheless, the next week could be the one bulls are waiting for, as the Nifty seems all set to hit a new high. The trend remains strongly positive with absolutely no signs of selling. The market witnessed a dip on 15 June 2023 when the index fell 0.36%, but that was soon bought by bulls without even waiting for a decent correction.
As the trend continues on the upside, the nearest support level for bears to again attempt to pounce on the Nifty 50 is 18,560. Unless this level gets breached, no short-selling opportunity would be reliable. As you might be seeing that the markets are absolutely going ruthless on bears, therefore, bears should wait for the trend structure to turn negative. Selling solely on the basis of overbought condition is not working in this market.
Coming to bulls, if long positions are on, they can be held with a trailing stop loss. Above the all-time high of 18,887.6, there will be no level to target profit booking, therefore trailing the position will probably be a better idea.
In the previous week’s analysis, I pointed out that 18,700 CE had a very high OI of over 2 lakh contracts. That was the reason I was not expecting 18,700 to get sliced through easily, but at the same time, this same high OI became the reason for some short covering which further propeled the index.
This week’s OI is not concentrated on one strike and is scattered across various levels. The 19,000 CE holds an OI of 1.25 lakh contracts, and due to it being a psychological level, the index might face some hurdle here. So the upside seems limited till the never-before-seen level of 19,000 on Nifty 50 for this week. On the lower side, 18,600 – 18,560 is the support from where buyers might come again (if this level comes).
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