NIFTY FUTURE WEEKLY
The week ended with a long lower shadow but made a lower top / lower bottom. The truncated week, saw a range of 213 points (High 4939 and Low 4726). Much of the gains were done on the last day of the week, when Nifty Future opened with a gap to make the week's high, which helped it close the week at 4899.
The only inference I would make is that there is strong support emerging at 4700 levels but the fact that Nifty Future made lower top /lower bottom continues to remain a concern for more downside. Secondly, for the past 8 weeks, Nifty Future has been trading within 505 range (High 5223 & Low 4718) resulting in a flag pattern. Any break below 4700 makes it possible for Nifty Future to test lower levels.
There has been considerable build up in put options till about 4300 strike price. However, downside bias has made the premiums very high and time element may make purchase of Puts not very lucrative unless 4700 is broken. In these circumstances, better alternative is to sell calls of higher strike price at resistance levels.
Have a nice weekend!
Ketan Asher.
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