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F&O outlook 12 August: Nifty may cross 16,500; Bank Nifty may move towards record high, if it tops 36,200

Now with new weekly expiry to kick in, there is no major activity seen OPTIONS segment and hence, it would be interesting to see the overall development on Friday. Image: Reuters

Two months’ of boredom finally came to an end as the market kicked off the August month with a bang. There were several attempts made recently to reach the millstone of 16000 but every time global markets became a spoil sport. This time it was certainly not the case. We had complete support from the global peers which provided impetus to reach the magical figure of 16000. The moment we surpassed and sustained above it, there was no looking back. In the last four trading sessions, Nifty added more than 3% to the bulls’ kitty to hasten towards the 16300 mark.

During last week, the Nifty had a smart recovery from the lower range; but the banking index kept sulking throughout. As everyone knew, if the Nifty has to reach new highs, it wouldn’t have been possible without the contribution of this heavyweight space. Fortunately, it didn’t disappoint this time; courtesy to initial charge from the ICICI Bank and then it was all SBI and HDFC Bank’s show to reach the higher boundary of Bank Nifty around 36000 – 36200.

Now, all eyes are on this space, because any sustainable move beyond 36200 would result in an extension of its rally towards its record high. This will certainly bode well for the bulls as we may then see Nifty reaching or even moving beyond the next milestone of 16500. In our sense, short term traders can start lightening up positions if the Nifty reaches the mentioned levels in the coming days.

Bank nifty, nifty 50, F&O weekly outlookAny sustainable move beyond 36200 in Bank Nifty would result in an extension of its rally towards its record high

As far as supports are concerned, 16200 followed by 16000 are likely to be considered as strong support for the benchmark; whereas for Bank Nifty, the similar zone is visible around 35500 – 35200.

In F&O space, we have witnessed a strong buying in futures segment in last three out four trading sessions, which is clearly reflected in the price action. In the up move, the put writers added good amount of positions in 16150 – 16300 strikes; followed by decent open interest addition in 16300 – 16400 call options. Now with new weekly expiry to kick in, there is no major activity seen options segment and hence, it would be interesting to see the overall development on Friday.

(Sameet Chavan is Chief Analyst – Technical and Derivatives, Angel Broking. Views expressed are the author’s own.)

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