Sensex, Nifty week ahead: What F&O data indicates, key events to watch

This week the BSE 30-share benchmark Sensex zoomed 2,000 points or 3.5% to scale 58,000-mark for the first time on Friday as it settled at a new closing lifetime high of 58,129.95. Strong domestic economic numbers are supporting the upward movement in the market even in these high levels of valuation, says Vinod Nair, Head of Research at Geojit Financial Services, pointing out to the economic reopening that has improved demand.

The benchmark index has gained over 10,000 points or 21.73% so far this year. The blue-chip NSE Nifty 50 index on Friday settled at 17,323, after logging a weekly gain of 3.70%.

“The next week is a holiday-shortened one and participants will be IIP data which is scheduled on September 10. Besides, the pace of vaccination and other COVID-related updates will also be in focus. Global markets have played a supportive role in the recent surge and their performance in the coming week would be equally important to maintain the prevailing bias,” said Ajit Mishra, VP Research at Religare Broking.

“We’re eyeing 17,500 in Nifty however it may see some pause or consolidation first. In case of any dip, the 17,200-17,050 zone would act as a cushion. The recent trend of rotational buying across sectors is likely to continue in the coming week too. Though the broader indices have also witnessed a decent surge of late, we recommend remain cautious as any profit-taking in the market may again derail the momentum. In short, align your positions according to the trend and continuing with the “buy on dips” approach,” he added. 

The trading sentiment will be guided mostly by global trends in absence of major domestic events, analysts said. 

Talking about options or F&O data, Santosh Meena, Head of Research, Swastika Investmart, said: “If we talk about derivative data then FIIs’ long exposure in the index future stands at 65% whereas they have added some long positions in index options which indicate that the market is not overheated on the derivative front and hedged for any sharp dip that may restrict any immediate fall. PCR stands at 1.35 level which is also at a very comfortable level.”

“If we talk about OI (open interest) built up for next week’s expiry then there is no major built up before 18000CE which has an open interest of around 52.5lac whereas 17300CE and 17500CE both have around 29lac of open interest. On the downside, the open interest is evenly distributed between the 17200-17000 zone,” he added. 

Though Nifty has been clocking new highs, the Nifty Bank index is still about 1,000 off its record highs. “Nifty Bank still remains a puzzle that has unfinished business to test its new high where 37200-37750 is an immediate resistance zone but it has the potential to move towards 40000 mark,” says Santosh Meena of Swastika Investmart.

Global cues will be important because we are outperforming the global peers and Indian markets may continue to outperform if there will be no major negative surprise, say analysts. 

“The US market will remain closed on Monday on account of Labor day and there was not much movement in Friday’s trading session, therefore, we can expect some consolidation in our market in Monday’s trading session but if Nifty consolidates then midcap and smallcap stocks may outperform. Covid cases are rising in the USA and in some other countries and that may be a cause of concern for global markets. Movement in USD-INR and FIIs’ behavior will be important to watch out for as FIIs’ flow is playing an important role in the current pace of the market,” said Santosh Meena of Swastika Investmart.