Nifty shorts still intact, continue to sell on rise till index breaches 17900-18000 range

Nifty shorts still intact, continue to sell on rise till index breaches 17900-18000 range

By Sameet Chavan

Market had a positive start yesterday despite mixed global cues. In the initial trades, it looked a bit tentative as there was some hangover left of previous day’s late correction. Fortunately, all these nerves settled down in the first half an hour and then it was all big boy RELIANCE’s show thereafter. The stock kept surging throughout the day to mark whopping gains over 6% percent. It is needless to mention when this heavyweight moves in this fashion, it certainly takes the benchmark alongside it. If we look at the contributors list, this stock single-handedly pushed Nifty beyond 17500 as it contributed 104 points in Nifty.

Rollover for Nifty and BankNifty stood at 82.56% and 83.76% respectively.(Image: REUTERS)

Market seems to have reversed precisely from the important resistance levels, be it Nifty and Bank Nifty or even the midcap index for that matter. Traders are advised not to get carried away by in between recoveries and should avoid taking aggressive longs for a while.

In November series, we witnessed majority of short formation in both the indices and these positions have been rolled over too. Rollover for Nifty and BankNifty stood at 82.56% and 83.76% respectively. Surprisingly, stronger hands halted selling in index futures and opted to add some longs in recent correction and have rollover these longs in the next series. This has resulted, Long Short Ratio surging from 54% to 70% now. However, they remained net sellers in equities for the November month. Considering the rollover data, we believe most of the shorts are still intact and until we don’t see a sustainable move beyond 17800.

(Sameet Chavan is a Chief Analyst – Technical & Derivatives at Angel One. Views expressed are the author’s own. Please consult your financial advisor before investing)