Finace And Stock

F&O: Nifty’s bearish candle and spike in VIX show rally is halting

Nifty on Monday opened positive, but failed to surpass the previous day’s high of 17,947 and witnessed profit-booking decline in the initial half towards the 17,800 level. However, it saw some recovery from the lows but remained consolidative in the second half and closed on a flat note. The index formed a bearish candle on the daily scale with a longer lower shadow, indicating that declines were bought into. Nifty50 has continued to form higher lows in the last three sessions. Now, it has to hold above the 17,800 level for a bounce towards the 18,000 level, whereas support is placed at 17,777 and 17,650 levels.

India VIX moved up 6.69 per cent from 16.92 to 18.05 level. A spurt in India VIX is causing volatile swings and now it has to cool down below 15-14 zone to continue the smooth ride of the market.

On the Options front, maximum Put Open Interest stood at the 17,000 level followed by 17,800, while maximum Call OI was seen at 18,000 level followed by 18,500. There was Call writing at 18,000 and then 17,900 levels while Put writing was seen at 17,000 and then 17,850 levels. Options data suggested a trading range between 17,600 and 18,000 levels.

Bank Nifty opened positive and touched a new record high of 38,355 in the initial tick. It moved in a consolidative manner thereafter and closed with a gain of around 340 points. Banking stocks outperformed the broader market and gained strength. The index formed a bullish candle on the daily scale and continued to form higher lows for the fourth straight session. Now it has to continue to hold above 38,100 level to witness a rise towards 38,800 level, while on the downside, major support was seen at 37,850 and then 37,500 levels.

Nifty futures closed flat to positive with the marginal gain of 0.06 per cent at 17,865 level. Among specific stocks, the trade setup looked bullish in Maruti, Godrej Properties, Tata Motors, IRCTC, Motherson Sumi, M&M, Amara Raja Battery, Bharat Forge, MCX, Tata Chemical, MRF, TVS Motor, Bajaj Auto, Hero Motocorp and Reliance but weak in Mindtree, Mphasis, Apollo Hospital, Divi’s Labs, Wipro, Metropolis, Dabur, Shriram Transport Finance Company, Lalpath Labs, VEDL, ICICI Pru, JSW Steel and MGL.


(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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