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NIFTY Daily review 3/11

IB Action : NIFTY opened above VA of the previous 3 days indicating an intent by the bulls to drive it up and we did see a drive towards the supply zone mentioned yesterday which is the single prints from 28/10.

By the end of IB we were near the supply zone left with a singles from 11725-11750 which was the previous resistance.

Our rules are buy the singles or buy the extension if we see a big buyer pushing it above IBH.

Within the IB there was an option buying opportunity as 11800CE took support at the writer’s levels mentioned yesterday which is Rs.103. This is a case where it is ok to react even before the end of IB because the calls have already broken out from writer’s levels. After taking support at Rs.103 this moved till Rs.133.

After that move or during this move we didn’t see big buyers evidencing a follow-up on the upside which is understandable as we are yet to absorb the previous supply zone.

What we did for the rest of the day is the absorption of supply in that previous selling zone and the dips have been defended by bulls and there was no good opportunity later in the day as it didn’t do much as neither we tested singles nor we got a big writer to trap on CE side or a big buyer in futures.

In terms of buyers and sellers we did see some longs being carried in NIFTY with an average entry of 11789 and this will have to be held for follow-up rally.

Going into tomorrow’s trade Buyers will need to hold 11775-11680 zone for follow through on the upside and they can get to the previous sellers zone of 11930-11940. If they can’t hold it above 11780 then we get back to 11645-660.

Overall option chain suggests that a lot of CE shorts have taken exit today but hardly we saw fresh positions being carried.

From a review of strike level data the following references will be the key for a move tomorrow.

11800PE – Rs.140

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