The Nifty lost 359 points during the day to close at 2584. Bears continued to be in complete control and rolled over short positions despite the Nifty futures discount widened further from 15 to 44 points. Almost all top-traded stock futures closed at the day’s low as bears preferred to uncover their shorts ahead of the expiry of the current month series on October 29.
After breaching the Nifty support level of 2900 on account of the gap-down opening, the index declined further and closed below its crucial support level of 2600. Technical analysts have different views on the next support level for the Nifty. A few technical analysts expect the Nifty to get a major support at 1900-2000, while some other expect the support at 2300, and below that at 2180.
Options traders expect the index to trade below the 2400 levels as we saw buying of the 2750 and 2800 puts of the November series at a premium of around 8-9 per cent over the spot Nifty close of 2584. The Nifty November futures witnessed rollovers of 4.03 million shares at a discount which supports options trader’s bearish view.
The Nifty could not hold support at 2900, so the 2900 put of the November series witnessed unwinding of short positions and there were no sellers for the 3000 put of the same series.
However, a few passionate investors were seen buying the 2800 and 2900 call of the November series by paying a premium of around 17 per cent on expectation that high volatility can swing the index above 3050 levels.
There is a panic everywhere, so this is a good time to invest in fundamentally strong stocks in a systematic manner. But one should avoid bottom fishing.
