By Chandan Taparia
The Nifty50 index continued its weakness on Tuesday, as it opened in the negative with a massive gap down and hit a fresh low of 10,276. However, the index recovered sharply about 200 points from the day's low to settle at 10,498. In the process, it formed a bullish candle on a daily chart.
However the index has been making lower lows for last seven sessions and weakness is visible all over, including in global markets. As long as the index remains below 10,650, weakness could continue to take it towards 10,400 and 10,350 levels, while on the upside, hurdles seen at 10,700 and 10,750 levels.
On the options front, maximum Put open interest stood at 10,500, followed by 10,000 and 10,300 levels, while maximum Call open interest stood at 11,500, followed by strike prices 11,000 and 12,000.
Put writing was seen at 10,000,10,300 and 9,900 while fresh Call writing was seen at 10,500, 10,600 and 10,400 levels. The option band signified a wider trading range, as volatility spiked to a multi-month high.
India VIX moved up 24.68 per cent to 20.01. A rise in volatility for last three sessions post Budget is affecting the smooth ride of the market.
Bank Nifty opened with a huge gap down and recovered 600 points from the day's low of 25,023 to settle at 25,811. It fell 1.05 per cent and formed a bullish candle. As long as it stays below 26,500, weakness could take it towards 25,750 and even 25,500 levels, while hurdles are seen at 26,360 and 26,750 levels.
Nifty futures closed in the negative with a 1.41 per cent loss at 10,534. Shorts buildup was seen in all sectors including pharma, PSU banks, auto and FMCG.
(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)
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