By Chandan Taparia
The Nifty50 opened gap-up and negated its formation of lower highs and lower lows of the last four trading session on Wednesday. The index remained volatile and formed a small bodied candle on the daily chart, which indicates that bears are putting pressure at higher levels, but at the same time bulls are not loosening their grip after the recent bottom of 10,049 levels.
Now, the index has to continue to hold above 10,141 zones to witness an upmove towards 10,276 and then 10,333 zones. On the downside, supports are seen at 10,050, and then psychological 10,000 marks.
On the option front, Maximum Put open interest was at 10,000 followed by 10,100 strikes, while maximum Call open interest was at 10,500, followed by 10,400 strike. We have seen meaningful Put writing at 10,200 strikes, which could act as a support, while Call writing is seen at 10,250 followed by 10,300 and 10,350 strikes. Option band signifies a trading range between 10,050 and 10,350 zones.
India VIX fell down by 3.22 per cent to 15.10. Decline in volatility in last two sessions is providing some comfort to the bulls. VIX still needs to fall below 13.50-13 for a short term reversal after the recent decline of around 1,100 point.
Nifty Bank opened positive, but follow-up buying was missing at higher levels, and it witnessed hurdle at its 200-DEMA. It has formed small bodied candle in the last two sessions, which implies indecision in the market near to crucial support zones. Now, the index has to surpass immediate hurdle of 24,500 zones to get some stability and a bounce towards 24,750 zones, while on the downside, major support is seen at 24,100-24,000 zones.
Nifty futures closed with a gain of 0.37 per cent at 10,181. Builtup of long position were seen in Marico, Jubilant FoodWorks, NMDC, NIIT Tech, NTPC, HDFC and Shriram Transport Finance. Shorts were seen in UBL, Ambuja Cements, Godrej Industries, Apollo Hospitals, Hero MotoCorp, Hindalco, Tata Steel, Sun TV and PC Jewellers.
(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)