A rise in geopolitical tensions could put a pause to a potential rally. MUMBAI: Confidence of the bulls seems to have returned with the Nifty reconquering the 10,000 mark on Monday.
A development that bodes well for investors is the shift in support base to the 9900 put from 9700 put and huge addition of open interest (OI) at the 10000 put level on Monday. The 10,000 put price per share (75 shares make a lot) closed at Rs 81.25. The number of positions added on Monday was a whopping 10.3 lakh, taking the total OI to 33.4 lakh shares. This puts a key support at 9,920 (10,000-minus closing price of put).
The addition of puts at 10000 is a bullish sign as sellers don’t expect the market to fall below 10,000 minus the price they’ve received from the put buyers Monday. Besides, the 9,900 put now has the highest OI at 56 lakh shares, compared to the 9700 put with 50.3 lakh shares.
Another development that favours an upmove at least for now is shedding of OIs in the 10000 and 9900 calls from Friday. On the basis of the average price of the 10000 call this series, the resistance for the market is 10,090. A breach above that level could take the market up to 10,150, above its record high of 10,138 of August 2.
If the markets correct due to any rise in geopolitical tensions, the first support is at 9,920. A break below that could extend the fall to 9,820.
A rise in geopolitical tensions could put a pause to a potential rally. But escalation in North Korea seems unlikely to analysts for now.