By Chandan Taparia
The Nifty index fell sharply in last one hour of trade and corrected by around 100 points on Monday. It broke its immediate support at 10,450 and corrected towards the 10,423 level. In the process, the Nifty50 formed a Bearish Candle on the daily chart and almost engulfed or wiped out the price movement of last seven sessions.
Now, if the index sustains below 10,450, then short-term weakness could be seen towards 10,400 and then 10,350 levels, while on the upside, hurdles are seen at 10,550 level.
On the options front, maximum Put open interest stood at 10,300 followed by 10,000, while maximum Call OI was at 11,000 followed by 10,700 levels. Fresh Call writing was seen at all strike prices from 10,500 to 11,000. The option band signified a broader trading range between 10,300 and 10,700 levels over the next few sessions.
India VIX moved up 5.39 per cent to 13.35. VIX has to hold below 13-12.50 level to support the overall bullish bias of the market.
Bank Nifty fell sharply and broke its support at 25,400. It has been underperforming the Nifty index and fell towards its 50-DEMA. Now it has to sustain above 25,500 to get stability towards 25,749 while on the downside supports are seen at 25,250 and then 25,000 levels .
Nifty futures closed with a gain of 0.63 per cent at 10,490. Long buildup was seen on the counters of Reliace Power, Tata Power, PC Jewellers, Reliance Capital, Jet Airways, Reliance Infra and NIIT Tech, while shorts were seen in BEL, Reliance Communications, SBI, HDFC, M&M, Ambuja Cement and Bajaj Finance.
(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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