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While momentum has cooled down in US markets, domestic markets continue to do well. Friday's session ensured that Nifty came out of the downward sloping channel that was being formed in January so far. Nifty 500 now has entered a 4 top bearish divergence on daily charts inspite of last week's green candle.
Nifty PCR OI has shot up to overbought territory of 1.43 as aggressive put writing was seen at 21,700 and 21,800 strike prices. Highest call writing is seen at 22,500 and 22,300 strike price. Week on week (WOW) long buildup was seen In Nifty (COl +4.6%) while Banknifty witnessed short positions (COI +5.3%). WOW top longs were seen in HCLTECH, ONGC and TATACONSUM. Shorts were seen in BAJAJFINSV, ASIANPAINTS and DIVISLABS.
It was quite interesting institutional activity last week as FIl's sold equities worth Rs. 3018 Crs but it was Dll's who were lapping up as they pumped in Rs. 6858 Crs. FIl Index longs were also lower week on week (66,619 contracts vs 76,253 contracts last week). Retail shorts were higher at 41,996 contracts vs 35,942 contracts last week. This means it was purely the DII cash buying which pulled the market up.
Weekly View
We were early in last week's bearish view.
Thanks to IT, supports have now shifted to 21,700 from earlier 21,500 while resistance has shifted to 22,300 from earlier 22,000.
View remains positive upto 22,300 on the back of domestic liquidity however caution is advised in case support of 21,700 gets violated.
Revised positional shorting area placed in the zone of 22,300 -22,500
Macro View
Nifty 500 weekly RSI (81.73) is extremely close to its 18 year high which means we are almost done with this rally. Additionally there is a 4 top bearish divergence on daily charts.
Advise to take profits in investment holdings around Nifty 22,300 and switch to defensive/stay light.
Thrust Stocks
ITC (467): Positive as long as it sustains above 460 for targets of 480/500.
HINDALCO (582): Bounce back expected upto 610; SL 570
ICICIBANK (1003): Reversal on the daily charts can see it testing 1050/1070 on the upside; SL 974.
Profit Booking
Nifty Midcap 100 and Nifty Smallcap 100 witnessing multiple bearish divergences + Monthly RSI at 17 year high.
Nifty PSE highly overbought on monthly and weekly time scales.
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