F&O: Nifty missing follow-up action on both sides, but sees buying at every dip

By Chandan Taparia

The Nifty50 index had a highly volatile session on Wednesday, as it traded in a wider range of around 190 points through the day. It headed towards the 10,940 mark in the early trade but fell sharply towards 10,750 level and finally closed with a loss of around 30 points.

The index formed a bearish candle on the daily scale, as it has got stuck in a trading range. Follow-up action was missing on both sides, as every dip got bought into, while every bounce is being sold in the market.

Now, it has to hold above 10,750 to extend its move towards 10,888 and then 10,929 levels, while on the downside, support exists at 10,720 and then 10,650 levels.

On the options front, maximum Put open interest was at 10,400 followed by 10,700 levels, while maximum Call OI was at 11,000 followed by 10,900 level. There was Call writing at 11,000 followed by 10,950 levels, while Put unwinding was seen at all immediate strike prices. The Option band signified a trading range between 10,720 and 10,929 levels.

India VIX moves up sharply by 10.45 per cent to 18.90 level. A sudden spike in VIX has caused a pause in the positive momentum and VIX has to cool down below 16-15 levels to get a smooth ride in the market.

Bank Nifty remained highly volatile throughout the session, as it traded in a wider range between 26,700 and 27,200 levels. It formed a bearish engulfing candle on the daily scale, as there was selling pressure at higher levels. It has been stuck between 26,666 and 27,200 levels since last 11 sessions. Now it requires a decisive range breakout from the current trading band to commence fresh momentum.

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On an immediate basis, the index has to hold above 26,850 to witness an upward move towards 27,000 and then 27,150 levels while on the downside major support exists at 26,666 level.

Nifty futures closed in the negative with a loss of 0.24 per cent at 10,802 level. Long buildup was seen in TCS, Ultratech Cement, NTPC and M&M Finance while shorts were seen in HUL, Bharti Infratel, Titan and BPCL.

(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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