Budget 2023 Strategy: Motilal Oswal's Analysis

Motilal Oswal Report

Nifty index has given a breakdown from its long consolidation of last 20 trading sessions with surge in volatility index. It is facing sustained supply near to its key moving averages and it started to form lower top - lower bottom in multiple time scale. It has broken previous month’s low along with formation of bearish engulfing pattern which has negative implication.

Looking at the overall chart structure, bounce could be sold as recent trend got deteriorated after breaking key support of 17777-17850 zones. As of now till it doesn’t negate the structure of lower top - lower bottom, weakness could extend towards 17350 and 17200 zones while key resistances are shifting lower to 18000 marks. 

India VIX has seen spurt in last three trading sessions from 13.30 to 19 zones and hovering at highest levels of last 15 weeks. Surge in volatility with decline in prices ahead of Union Budget suggests some sort of concern in the market.

It is advised to hedge your existing long position by buying Protective Puts or initiate Bear Put Spread in Weekly or Monthly expiries. It is also advised to reduce the cost of position in delivery by writing higher strike Calls in selective F&O stocks (covered call) as upside seems to be capped for time being

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