Market appears long heavy

The market on Monday failed to hold the opening momentum as profit booking emerged after the recent sharp rally. However, the benchmark indices managed to make gains for sixth straight day led by buying interest in private sector lenders like HDFC Bank, Axis Bank, Kotak Mahindra Bank, ICICI Bank and IndusInd Bank. The Sensex ended 71 points or 0.19 per cent higher at 38,095, while the Nifty rose 35 points or 0.31 per cent to close at 11,462.

Eight of 11 sector ended higher led by the Nifty Realty Index up 2.8 per cent gain. The volatility Index surged 6.56 per cent and is at two-week high.

Technical View
Analysts said the short term trend for the market remains positive, no major reversal in trend and immediate supports to the Nifty is at 11,410

"The Nifty continued with upside momentum on Monday amidst a volatility and closed the day on a decent gains. A small body negative candle has been formed with upper and lower shadow, at the swing high of 11,530 levels. This action could indicate a formation of a high wave or doji (not a classical doji) type pattern at the highs. This formation signals confusion state of mind among participants," Nagaraj Shetti - Technical Analyst, HDFC securities said.

Liquidity situation in the market is improving and Indian rupee continued to gain strength over dollar while domestic 10yr yield slid. Investors are awaiting FED policy later in the week to get more cues about global market movement.

On the Nifty options front, fresh writing took place in 11500-11700 call options. On the other side, there was open interest addition in 11400 and 11500 put options. Now, the maximum open interest concentration for March series is placed at 11500 call and 11000 put options.

"Since the beginning of March series, we have been witnessing huge amount of long formation and now it seems we are long heavy. At present, around 11500 is the immediate hurdle; whereas, 11250-11300 shall act as a support. As the outstanding contracts in futures segment is heavy now, we would advise traders to lighten up their positions in Index and prefer trading in individual counters for better risk reward ratio," said Sneha Seth Derivatives Analyst, Angel Broking.

Market View
Strong FII inflows in larger Mid-Caps and Large-Caps are being witnessed and should continue till election. Another rate cut possible in coming RBI policy, as inflation though a bit increasing will stay below 3.5-3.8 per cent. Strong earnings growth in the Nifty stock most likely to produce in second half of FY 20, analysts said.

"The support on the lower side for the Nifty is pegged at 11385 whereas the resistance is pegged at 11560 levels; hence the short term range for the market is 11385-11560 levels. The daily as well as weekly momentum indicator MACD is well into buy mode, Jay Thakkar, CMT Head Technical and Derivatives Research - AVP Equity Research, Anand Rathi Shares.

Some consolidation in the Index will be healthy for the markets. Traders should maintain their focus on stock selection but it's not going to be easy after the recent surge, they said.