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The entire week for the Indian market was a good one, except for the last day wherein we witnessed brutal selling pressure. The index took a hit of 1.17% to 19,745 which distorted the rally of the preceding 4 sessions. This selling day reduced the gain of the entire week to just 0.92% but still, it closed in the green for the 4th straight week.
The selling was triggered primarily by the bad guidance of Infosys (NS:) which dragged the entire IT sector and consequently, the index fell 4.09% to 29,871.05. One thing that happened this week which could be troublesome for bulls is that the broke its previous day’s low for the first time in 6 sessions.
This break of series is indicating some technical weakness on the chart but still, the long-term trend remains intact. For the current 27 July 2023 expiry, traders can expect the level of 20,000 to be a very strong resistance. On Thursday when the market was roaring, this level could not be breached and after a sharp 234-point cut on Friday, it has become even more difficult to break it this week.
The options chain data is also showing a hefty open interest (OI) of 1.94 lakh contracts on the 20000 CE. In fact, a higher OI of 2.2 lakh contracts is present at 19900 CE, making the upside limited for the next 4 sessions.
On the lower side, 19,500 can be looked at as a decent support level. This demand zone might not get taken out so easily. The OI on 19500 PE is 1.14 lakh contracts, enough to support the index if it falls into this zone.
So, the levels for the next week are 20,000 on the upside and 19,500 on the lower side, with a slightly bearish view and a sell-on-rise strategy can be deployed as long as 20,000 is untouched. Above this level, the bull run will likely resume.
Disclosure: I have multiple positions in Nifty 50 options
Read More: Radar: A BIG Pennant Breakout Amid 7% Rally!
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