Finace And Stock

F&O: Nifty’s short-term trend under threat; spike in VIX bolsters bears

Nifty50 opened positive on Wednesday and headed towards the 17,884 level in the first half of the session, but it could not stay at higher levels. The bears dragged the index and it drifted towards the 17,613 mark by breaking below the previous day’s lows. Nifty closed near the day’s low point with a loss of around 175 points and wiped away previous day’s gains.

It formed a Bearish Engulfing candle on the daily scale, threatening the short-term trend with sustained supply at higher levels. Now it has to cross and hold above the 17,700 level for a bounce towards 17,777 and 17,900 levels, whereas on the downside support is seen at 17,580 and 17,450 levels.

India VIX moved up by 5.69 per cent from 16.39 to 17.33 level. A spurt in volatility after the decline of last four sessions has again triggered volatile swings in the broader market. Now VIX needs to cool down below the 15-14 zone to continue the smooth ride of the market.

In Options data, maximum Put Open Interest was seen at 17,000 followed by 17,500 levels, while maximum Call OI stood at 18,000 followed by 18,500 levels. Minor call writing was seen at 17,800 and then 17,700 levels while there was Put writing at 17,800 and 17,700 levels. Option data suggested a broader trading range between 17,200 and 18,200 levels while an immediate trading range lies between 17,500 and 17,900 levels.

Bank Nifty opened positive and even after crossing the 38,100 level, weakness on the Street caused the index to cascade by more than 600 points from higher levels. It respected the previous day’s low levels, but closed with a loss of around 220 points. The index formed a bearish candle on the daily scale with a long upper shadow,which indicated the absence of follow-up buying in the market. Now, the index has to hold above the 37,500 level to witness a bounce towards 37,850 and 38,100 levels while on the downside, major support was seen at 37,300 and 37,000 levels.

Nifty futures closed negative with a loss of 1.23 per cent at 17,610 level. Among specific stocks, the trade setup looked bullish in Bosch Ltd, Deepak Nitrite, IRCTC, Coromandel, Tata Chemical, ONGC, Bandhan Bank, HDFC Bank and Britannia but weak in VEDL, RBL Bank, Can Fin Homes, Hindalco, TVS Motor, Jubilant FoodWorks, Canara Bank, BEL, Tata Steel, PNB, Glenmark, JSW Steel, Adani Ports, Cadila, Indiamart and Cipla.

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

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