Nifty Financial institution might proceed to consolidate this week. What merchants ought to do

Technique Positions:

Promote 1 lot Financial institution Nifty 20 October 38200 Put at 82 & Promote 1 heaps 20 October 40400 Name at 80, Whole premium in-flow: 162; Goal: 20; Cease loss: 250.

Rationale:

The banking index gained marginally final week and largely consolidated close to 39,000 ranges regardless of continued depreciation in rupee and rise in bond yields. Outperformance was seen from the shares like

, First and , whereas heavyweights noticed some consolidation forward of their quarterly numbers. We count on the banking index to proceed its consolidation, the place declines in the direction of 38,500/38,800 stay a shopping for alternative.

Because of the continued resilience proven by the banking index, the futures open curiosity has been comparatively decrease in Financial institution Nifty, and recent shorts weren’t seen throughout the week. Nevertheless, stock-specific vital Name writing positions are seen amongst PSU and personal sector heavyweights. Therefore, we might even see restricted upsides on this pack.

On the information entrance, Financial institution Nifty ATM strikes held vital Name writing positions, and regardless of a pointy transfer seen on Friday, no main closure was noticed. We consider a transfer in the direction of 40,000 will be anticipated within the banking index. Nevertheless, a runaway transfer appears unlikely.

We really feel within the coming days, 1000 level of vary certain periods can’t be dominated out, and merchants can go for brief strangle the place revenue shall be made throughout the 38050-40500 vary. Nevertheless, one must be cautious on either side as technique will begin making loss if Financial institution Nifty strikes above or beneath the given vary.

A dealer shall be in most revenue if Financial institution Nifty closes between 38,050 and 40500 on the twentieth October expiry.

Raj Deepak Singh is analyst – F&O at ICICIdirect