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The benchmark Nifty 50 (18,497) lost 1.1 per cent last week, while Nifty Bank (43,633) outperformed the Nifty with a gain of 1.2 per cent. Here we look at few derivative data and try to predict the possible course of action till December expiry.
Nifty 50
The December Nifty 50 futures, which saw long build-up two weeks ago, saw unwinding of those positions through last week. However, towards the end of the last week, it appeared that there was some short build-up on futures.
The price was down by 0.6 per cent on Friday along with an increase in the outstanding Open Interest (OI) to nearly 131 lakh contracts compared to preceding day’s 127 lakh contracts.
Looking at the options data, the PCR of December 15 expiry stands at 0.52, indicating significant call writing.
On the other hand, PCR of December 29 series (monthly expiry) is now at 1.25 showing more put selling.
Therefore, the Nifty 50 index could see a decline from here in the coming week and might recover in the second half of the month. 18300 and 18000-strike put options have seen good writing. Therefore, the index might start rallying after touching either 18,300 or 18,000.
Nifty Bank
The December Nifty Bank futures, although experienced some unwinding of longs on Friday, the week-on-week change of cumulative OI of it shows long build-up. That is, the contract appreciated 1 per cent along with an increase in cumulative OI to 31.4 lakh contracts from 30.7 lakh contracts over the past week.
The PCR of December 15 and 29 expiries are at 0.91 and 1.2, respectively. So, we cannot read much weakness in Nifty Bank compared to Nifty 50. So, instead of a possible correction followed by a potential rally in the Nifty 50, the Nifty Bank could stay sideways this week and could see an up move from third week of the current month.
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