F&O Manual | Bulls on the charge, but supply pressure likely; Nifty may find support at 19,500 (labcalindia)

Domestic indices traded with gains on September 5, despite weakness in Asian markets. Some traders, however, anticipated supply pressure in the later half of the day, especially in the banking index.

Nifty 50 traded at 19,581.50, up 53 points or 0.27 percent, while Nifty Bank traded with a slight cut at 44,544.05. Broader market indices – Nifty Smallcap and Nifty Midcap – fared better, rising about a percent each.

“I expect some selling pressure in the market,” said Rajesh Srivastawa, a Bengaluru-based derivatives trader. “Traders are adjusting to the new expiry day for Bank Nifty (Wednesdays).”

Option data shows fresh put writings at the 19,500 levels, which is acting as support for the Nifty 50. Call writers, in comparison, were dormant during the day so far. Nonetheless, some resistance is seen at the 19,600 level.

Sameet Chavan, Head of Research for Technical and Derivatives at Angel One, said the market has shown its intent and it would be just a matter of time before the benchmark would come out from the broader consolidation zone to regain a strong momentum.

“As we proceed, the undertone seems to favour the bulls, while buying on the decline should be the apt strategy in the coming period. Also, sectoral rotation is evident and one should focus on the thematic movers along with the mid-cap and small-cap spaces to have an outperformance,” he said.

In the Bank Nifty, traders were seen taking straddle trades at the 44,500 level. Call writers were building pressure at higher levels with fresh writings at 44,600 and 44,700.

Among individual stocks, most saw long build-up or short-covering – a sign of strong bullish momentum in the broader market. Zee Entertainment, Indiamart, Aditya Birla Fashion Retail were top stocks where bulls accumulated positions. Jubilant Food, Petronet LNG and ABB India saw shirt covering.

Traders were seen shorting Nalco, Samvardhana Motherson and SAIL.

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