Futures & Options expiry outlook: Nifty in overbought zone, support at 17200, resistance at 17500

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By Ruchit Jain  

After posting a smart rally in the July series, Nifty started the August series on a positive note and it reclaimed the 17000 mark at the start of the series. The index kept its momentum intact and almost tested the 17500 mark on the first weekly expiry day of the month. We witnessed some volatility on the expiry day but the index recovered from its intraday lows to end a tad below 17400. The indices (Nifty and Bank Nifty) have rallied this week on the back of long formations at the start of the series. But the Bank Nifty index has seen some long prior to the RBI Policy on Friday. This indicates profit booking ahead of the event as the indices have already rallied significantly in the last few weeks and are now trading in an overbought zone.

If we look at FII data, they had squared off most of their short positions in the July series and had rolled over some long positions due to which their ‘Long Short Ratio’ at the start of the series was around 57 per cent. They added some long positions at the start of the new series, but have booked out some in the last couple of sessions and hence the given ratio now stands a tad below 51 per cent. This too indicates that stronger hands have been looking to book profits in this up move beyond 17200. On the other hand, the client section of traders too has reduced some of their positions and they also have 51 per cent long positions in the system. 

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In the options segment, the coming weekly series has some open interest build-up in 17500 calls and 17000 put options. As per the data, 17000-17500 should be the immediate trading range and a breakout beyond the range would lead to the next directional move. The futures data is also neutral as of now as we have seen long unwinding and not meaningful short formations. For the next one week, 17200 followed by 17000 will be seen as crucial support and a break below the same could then lead to a short-term downtrend. On the flip side, 17500 is the immediate resistance followed by 17700-17800 range. Traders are advised to look for the formation of fresh positions and trade in the direction accordingly. 

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(Ruchit Jain is the Lead Research at 5paisa.com. Views expressed are the author’s own. Please consult your financial advisor before investing.)