Heading further high without Banks? : Weekly Market Analysis : June 14 2021

• Nifty made yet another (6th consecutive weeks) all time high at 15835.55 and closed with a weekly spinning top candle while the last nifty candle is a Doji indicating indecisiveness.

• Daily candle had been walking on the or close by the bands of Bollinger band with enough volatility expansion.

• Nifty did a small correction to dip to 15566 levels last week before climbing back to gain the momentum in the rally.

• There is a support seen for nifty at 15600 levels from where is bounced up and where it also had a  previous resistance too.

• Fibonacci 23 retracement level of 15430-15330 levels is in confluences with 20 day moving average and also the previous resistance that has turned to be support now for nifty.

• 16000 would be psychological round number and Fibonacci extension resistance area for nifty.

• Nifty momentum on daily/weekly/monthly is intact within bullish zones.

• Nifty Momentum on daily had a confirmed 6 bar bullish positive reverse divergence and nearly met the targets too during last 2 days of the week. However currently momentum  has a bearish divergence on daily chart where price is rising and momentum slowing down that could potentially take it back to previous dip below 15600 if it works out.

• ADX trend indicator strength is rising again and is sufficiently bullish on all timeframes be it short/medium/long term.

• Bank nifty on the contrary o nifty , had 650 point from correction before it recovered 600 of it to still closing below previous close with a bearish near hammer weekly candle patterns. Except on expiry day bank-nifty had bearish candle on all other days.

• The momentum of bank-nifty daily dipped into sideways zone. However on weekly the momentum is showing a range shift from the sideways to bearish zone if it manage to bounce up in the coming week while monthly momentum  is  still taking support at 60 in the bullish zone.

• The ADX trend indicator has crossed over to bearish side on bank-nifty daily timeframe although the strength of it is not rising. The trend continue to be in bullish side on medium and long term timeframes with flat strength.

• Bank-nifty has taken a CIP(change in polarity) bounce from previous resistance area of 34300/34600 levels which is in confluence with Fibonacci 50 and currently taken support at the 20 day moving average at 34800 levels above FIB 38 .The 33500 levels near FIB 61 and previous swing low could be support if above levels are broken next week.

• On the upside Bank-nifty has first resistance at 35800 levels from where it dipped last time and above that we have resistance at previous swing high of 36500 and then all time levels of 37700 levels would be resistance points it has to break if it rallies.

• Open interest data for nifty showing a long buildup while bank-nifty is showing a short buildup based on the futures contracts.

• Highest options call writing for 17 jun expiry is seen at 16000 and then 15800 levels both of which could be major resistance point for nifty rally. call unwinding seen for 15700 levels.

• Bank-nifty options open interest data shows highest call and put writing at 35000 levels which could critical to watch on next week. Large call writing seen at 355000 levels too and supports can be seen below at 34500/34000 levels.

• Put call ratio for nifty accordingly is seen 1.35 which is bullish while 0.73 for bank-nifty is not bullish.

• India VIX fall 7% last week to reach yet another low level of 14.48.Implied volatility is above HIV with IVP remaining 0.4 levels which is the new volatility regime.

• Currently form the futures and options data and charts and indicator it is evident that Bank-nifty continues to be bearish and not supporting the nifty up move.

• Very low volatility regime is not much in favor of option seller while any mean reversion from these levels rising up could benefit option buyers.

• The IT/Metal/Energy/Auto/Infra/FMCG/Pharma are all roaring in bullish momentum.

• Metal sector shows a weekly as well as daily momentum bearish divergence and so caution when u try to be long when it is rally and a buy on dip could be done later on. Pharma has a bearish divergence on momentum currently while Auto has momentum positive reverse divergence on daily and a momentum range shift on weekly which could make bullish moves coming days or weeks.

• .In the cash market FII were buying 3 days except large selloff on Wednesday while DII were buying except on Monday and Friday and June has net near 3000 crore buying so far is positive. They are net long on derivative too.

• US markets are positive now .Dow Jones also taking a momentum support and heading up while S&P and Nasdaq in bullish zone and heading north.

• Dollar Index gained strength and taking momentum support above 90 levels and heading up. USD-INR currency pair taken support at 73 levels with 4 green candles last week and going long on it may not be bad idea.

• Gold is consolidating after the channel breakout on weekly and is at momentum support levels and is likely to move up next week if could hold above the 20 day moving average .

• To wrap up , Selling put options at nifty 16000 levels with hedged spread positions could benefit as swing trade for next week due to fact that nifty may find it not easy to cross it with little support from bank-nifty. However if banking stock especially HDFC kind of index stocks join the party then 16000 would be very close 200 point target that could be covered on any single day gap up itself and so caution and defined risk options strategies need to be implemented. Power sector stocks like ntpc/powergrid/pfc/coalindia are all having a result week and earnings trade on option could be planned .option sellers could benefit from the volatility crush after the event.