SGX Nifty Rallies to 17,800: Is 18 Aug Expiry Also for Bulls?

  • Stock Market Analysis

The ongoing rally in the Indian markets has been cheering bulls for a long time now. After the benchmark Nifty 50 index marked a bottom in June 2022, it gave investors a once-in-a-while rally which is still continuing. The last few weekly expiries of the Nifty 50 have probably burnt the fingers of call option sellers as we have been witnessing a straight one-way rally, while the put option sellers have laughed all the way to the bank.

While there is a holiday on Monday on account of Independence Day, the SGX Nifty is again denoting a probability of a gap-up opening on Tuesday. The proxy to the Indian Nifty, SGX Nifty is currently trading an inch away from the 17,800 mark but had already touched a high of 17,845.5 today, which depicts another positive session on Tuesday. The last closing price of the Nifty futures in our markets was 17,716.9, meaning there would again be a possibility of an extension of the rally further to the next level of 17,800.

Image Description: Daily chart of Nifty 50 (spot) showing resistance areas

Image Source: Investing.com 

Interestingly, this is the exact level that has the highest open interest of all the available strike prices for the current expiry. The 17,800 CE holds an OI of 1.17 lakh contracts out of which a massive 60.1K contracts were added on Friday alone. This level might act as a strong resistance especially considering the highly overbought status of the Nifty. On the daily chart as well, the peak of 17,794 in February 2022 also denotes this level to be a strong selling zone. It does not mean that the market would surely reverse from here, but a gap-up to this level might lead to some correction, at least.

On the lower side, bulls are looking a bit cautious while selling put options. The highest OI stands at 17,000 PE, at over 90.7K contracts, which is some 700 points away from the CMP. After this, 17,500 has the second-highest OI of 85.1K contracts which would act as strong support. Hence, the options data is depicting a range of 17,800 - 17,500 for the current expiry.

India’s CPI data for July 2022 also came on Friday after the market closed. The country reported a third consecutive YoY fall in inflation to 6.71%, compared to 7.01% in June 2022 and 7.04% in May 2022. As a cool-off in the inflationary pressure continued for the third month, it would definitely be a positive sign, which is probably what is currently being reflected in the gains of SGX Nifty.

Global Cues

On the global front, the Dow Jones futures is trading 0.6% down to 33,558 and the S&P 500 is down 0.65% to 4,252, despite which there is no weakness seen in the SGX Nifty. Brent crude has seen a noticeable drop of around 5% today to US$93.23 per barrel which is a healthy sign for the Indian markets. The Indian rupee has also strengthened a bit from the earlier session, with the USD/INR pair falling 0.15% to 79.48.

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  • Ramesh Kannan @Ramesh Kannan
    We all know that globally what is happening is a fierceful short covering rally against huge short positions built up over the last 3 months. Post facto, the reasons are mere attributes in the names.
    Like 1
  • Disha Dubey @Disha Dubey
    china growth slowing. this could impact metal index ans may prove to be the reason for correction.
    Like 0
    • Tiwari Groups @Tiwari Groups
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

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      100
  • Disha Dubey @Disha Dubey
    china growth slowing. this could impact metal index ans may prove to be the reason for correction.
    Like 1
  • Disha Dubey @Disha Dubey
    china growth slowing. this could impact metal index ans may prove to be the reason for correction.
    Like 0
  • Tiwari Groups @Tiwari Groups
    Buy CE 17700 RANGE in btwn 110 -120.Target 180 -200 . 18 Aug expiry
    Like 5
  • Kemburu S Prasad @Kemburu S Prasad
    Indian markets will see a decent correction of 3-4% before expiry.
    Like 0
  • Ravi shankar Kumar @Ravi shankar Kumar
    Thanks 👍
    Like 0
  • MANJU JAIN @MANJU JAIN
    Thanks
    Like 1
  • MANJU JAIN @MANJU JAIN
    Thanks
    Like 1
  • MANJU JAIN @MANJU JAIN
    Thanks
    Like 0
  • lokesh sharma @lokesh sharma
    thx a lot man
    Like 0
  • Vikas Dhate @Vikas Dhate
    Thanks
    Like 1
  • sumitra sahoo @sumitra sahoo
    thanks
    Like 0
  • shanta kalal @shanta kalal
    thanks a lot
    Like 0
  • Anil Mohapatra @Anil Mohapatra
    Thanks Aayush once again for in-depth article
    Like 1
  • Sharma Rampalli @Sharma Rampalli
    very good article. Thank you
    Like 0
  • MOHAMMED EJAZ @MOHAMMED EJAZ
    very wonderful article and very very useful and very technical thank you so much
    Like 1

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