Thursday, October 29

F&O: Nifty negates lower top & bottom; but VIX is still high

By Chandan Taparia

Nifty on Thursday opened positive above the immediate hurdle at 11,333 level, and witnessed sustained buying interest towards the 11,450 level. It formed a bullish candle on the daily scale and the bulls managed to regain their losing ground in the last two sessions.
The index negated the formation of lower top and bottom on the lower time frame chart, and had the highest daily close in last five sessions near the 11,450 mark. The index again started to form higher lows and reclaimed the position at highest point towards the end of the week. Now, as long as the index holds above the 11,333-11,350 zone, Nifty can head towards the 11,550-11,600 zone, while on the downside medium-term support exists in the 11,200-11,180 zone.

India VIX fell 4.35 per cent from 22.23 to 21.26 level. The VIX has fallen to the lowest closing point of the week, but needs to further cool down below the 20-18 zone to help the bulls get a grip for the next leg of rally.

On the options front, maximum Put open interest stood at 11,000 level followed by 10,500, while maximum Call OI was at 11,500 followed by 12,000 level. Marginal Call writing was seen at 11,700 and then 12,000 levels, while there was Put writing at 11,300 and then strike price 10,600. Options data suggested a wider trading range between 11,200 and 11,700 levels.

Bank Nifty underperformed Nifty, but managed to hold above its 50 DEMA with the intraday gain of around 1 per cent. It formed a high wave Doji candle, as it closed near its opening zone even after its volatile swing between 22,222 and 22,650 levels. The index negated the formation of lower highs and lows on the daily scale after four sessions, but the absence of followup buying was clearly seen on the banking counter. Now the index needs to hold above 22,500 level to witness some stability and move towards 22,750 and 23,200 zones. However, a hold below 22,222 level may drag the rate-sensitive index towards 21,750 level.

Nifty futures closed positive at 11,465 level with a decent gain of 1.40 per cent. The trade setup was positive in RIL, BPCL, Asian Paint, ACC, Grasim, Berger Paint, Cummins India, Tata Consumer, Pidilite Industries and Hero MotoCorp but weak in Shriram Transport, Coal India, Kotak Bank and GAIL.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)
Credit: Stocks-Markets-Economic Times

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