Thread by @ICICI_Direct

Weekly Derivative Outlook (April 17 - April 21) 📉📈:
1⃣ #nifty
2⃣ #BankNifty

1/n

2/n

🟥 Nifty

♦️ The Nifty extended its gains by 1% in a truncated week & tested our targets of 17800 driven largely by short covering
♦️ Once again financial stocks were major gainers along with mid & small caps, which continued their momentum in the new financial year

3/n

♦️ Going ahead, we expect the Nifty to consolidate with support near 17500 amid results from heavyweights
♦️ The current open interest in the Nifty is nearly at a one year low as short closure continued during the series

4/n

♦️ FIIs’ net shorts have declined to just 40,000 contracts from 1.95 lakh contracts seen in mid-March. Hence, we believe that fresh accumulation of positions may provide further cues for directional movement

5/n

♦️ Despite the Nifty trading above 17800, Call writing was relatively higher than Puts suggesting expectations of limited upsides
♦️The highest Call base is placed @ 18000. Hence, in case, short covering trend continues then a move towards this level cannot be ruled out

6/n

♦️ However, we believe the Nifty will exhibit a range bound movement in coming sessions
♦️ The volatility index (VIX) has remained low near 12 levels throughout the week along with US VIX, which has moved towards 19 levels

7/n

♦️ Hence, an uptick in volatility cannot be ruled out, which may result in marginal profit booking in coming sessions

8/n

🟧 Banknifty

🔸For the major part of the April series, BankNifty has outperformed Nifty & gave a weekly close well above 42000 levels
🔸We believe the current leg of outperformance in the BankNifty should continue but it is likely to consolidate around 42000 levels

9/n

🔸Due to a big up move seen in the last few sessions, Bank Nifty has managed to cross its Call base
🔸Now positions have shifted higher towards 43000 & 43500 strikes
🔸Put writers have become quite aggressive & ATM 42000 Put holds significant OI for the coming week expiry

10/n

🔸We feel the current volatility and positive global sentiments should also support the current momentum
🔸Result from private sector heavyweight HDFC Bank during the weekend will set the tone for further directional movement

11/n

🔸We also expect the PSU banking space to witness some catchup activity in the coming sessions

12/12

Disclaimer: bit.ly/fulldisclaimer

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