US market will be back on business after a break. But, the direction will be clearer once the European markets open. Technically, S&P500 is near a good support. Need to see whether the low of last trading session still holds good or not. As of writing this, world markets are looking strong. In fact, DAX is back bullish after a knee jerk reaction from yesterday (natural gas supply issue with Russia).
In F&O space, FII, Pro have substantially covered their bearish position whereas retail has taken a bearish position now. So, a gap up seems certain but need to see whether market sustains at higher levels or not.
In the cash segment, FII was net seller and DII was net buyer. Overall, volume is still less than normal but after a long time there was a good selling by FII. Need to see this going forward.
Nifty has still not confidently broken 17700. If breaks and sustains above 17720, then a quick move of 100 points expected.
Nifty option chain, for the expiry of Sep8, call writing at 17600 level was not removed even though it was pretty much ITM. Any gap up will trap those writers and if that gap up is beyond 17720, then their prices may not come back. Even call writers at 17700 will be in trouble. There were not much put writers at ITM level. Looks like retailers are most of those brave-heart call writers who can be possibly trapped right at the beginning. OI chain analysis can be done in live market using sites like tradingtick or opstra.
Market likely to open around 50-100 points gap up. If Nifty opens above 17720 level and stays above it, a short covering can come in the second half. On the other hand, if Nifty opens flat and takes a resistance at 17700-17720 level, then we can see some opportunity to short once it breaks 17660 towards downside.
Follow the levels shown on the charts below. Concentrate on intra-day trades and not carry forward as market looks like to provide one sided movement today.
Banknifty which apparently looked stronger thus far has given a small breakout. So, obvious trade is on the upside. But, if a gap-up takes it to 40150-40200 level, then a short trade for 200 points can be initiated as that itself is a level of resistance.