Derivatives Monthly Outlook - Nifty support at 12800 for ongoing momentum...

Nifty has major Call build up at 13500 strikes

The Nifty continued to display strength with Call writers moving to the uncharted zone of 13300 and 13500 strikes in weekly as well as monthly expiry. The highest Call option base for the December series is seen at ATM 13000 Call strike with additions also focusing on 13300 Call strike on weekly expiry, indicating immediate hurdle on upsides.

The open interest in the Nifty has increased further compared to the last month at inception. The December series is starting with open interest close to 11.4 million against 10 million shares seen in the last series. Nifty December futures added almost 2.7 million shares during the settlement trade. Due to high premium, we feel volatility is likely to remain high in coming days.

Positional support for Nifty at 12500, 12800

On the lower side, major options concentration is seen at the 12800 Put strike in weekly as well as monthly expiry. Declines towards these levels are still a buying opportunity. However, below these levels, the Nifty should find support at lower level of 12500.

Rollover activity was particularly strong in the midcap & small cap space while the Nifty may spend some time consolidating. A broader stock based recovery is likely to continue in December, especially in underperforming sectors.

Bank Nifty: Positive bias to be maintained as long as 28000 is held

The trend of Bank Nifty outperformance resumed as key banking index heavyweights moved up strongly in the November series. This trend helped the Bank Nifty register gains of 23% vs. the Nifty as it moved up over 11%.

The open interest in the Bank Nifty has declined marginally compared to the last series. The new series OI is close to 1.4 million shares compared to 1.6 million shares seen in the last series. The roll spread in the banking index has remained under pressure around 50 points after significant outperformance in the last two months.

For details, click on the link below: https://www.icicidirect.com/mailimages/ICICIdirect_MonthlyTrend.pdf

Source : Equity Bulls

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