F&O expiry outlook 21 August: Nifty heads to 16,500 target, Bank Nifty may trade in 35500-36300 range

By Sameet Chavan

The August month started with a bang last week as we not only managed to reach the much-awaited milestone of 16000 but also moved beyond it convincingly. This was followed by a quiet start this week. In fact, during the first three trading sessions, our markets consolidated with some hint of profit booking at lower levels. Fortunately, the mighty bears provided cushion at the lower range of 16200 – 16170 for the Nifty.

Undoubtedly, the trend remains bullish and more importantly, the broader market got its mojo back after taking some beating in the last 3 – 4 trading sessions. It would be difficult for the benchmark index to keep up the same pace now. Hence, despite a strong uptrend, one should avoid aggressive bets in the index at this juncture. We would see a gradual move to test new millstones of 16500 and beyond; but meanwhile, expect individual stock to perform well. Traders are advised to focus more on individual stocks and continue with one step at a time approach.

As we step into the next weekly expiry, the highest OI still stands at 16300 Puts, suggesting immediate support for Nifty

Since we are at such elevated levels, one should avoid complacency because any aberration on the global front may result in a surpassing decline in our market. One needs to keep this in the back of the mind and should keep booking timely profits on momentum trades. The sacrosanct support is now clearly visible at 16200 – 16170 in the near term.

As far as Bank Nifty is concerned, it suddenly wakes up some day and exhibits signs of a breakout move. But again the momentum fades all of a sudden in this space, resulting in a consolidation phase. Similarly, since the last few days the Bank Nifty has been making valiant attempts to go past the sturdy wall of 36200 – 36300; but unable to do so. Only a sustainable breakout outside this range upwards would result in a faster move in banking space. Till then consider 36300 – 35500 as an immediate range.

As far as options activity is concerned, we saw tremendous conviction from the put writers on Wednesday at the strike of 16200. On Thursday, the base got shifted higher to 16300. Throughout the day, this level was defended convincingly and as we step into the next weekly expiry, the highest OI still stands at 16300 Puts, suggesting immediate support for Nifty. On the flipside, there is not much activity seen from call writers in the coming weekly expiry. It would be interesting to see how things pan out on Friday.

(Sameet Chavan is Chief Analyst – Technical and Derivatives, Angel Broking. Views expressed are the author’s own.)