F&O: Call unwinding at higher strikes suggests a bullish bias

By Chandan Taparia

The Nifty50 index continued its bounce and headed towards the 10,472 mark in Tuesday's session. It is just few points away from its lifetime high and registered the highest daily close ever.

The index formed a bullish candle on the daily chart and is set to head towards a new high. Now, it has to hold above the 10,380-10,400 zone to extend its move towards the 10,550-10,600 zone, while on the downside support is seen at 10,330 level.

On the options front, maximum Put open interest stood at 10,000 followed by 10,200 and 10,300 while maximum Call OI was at 10,500 followed by 10,600. Significant Put writing was seen at strike price 10,400 while Call unwinding was seen at all the higher strike prices.

Put writing at higher strike prices with Call unwinding suggests a shift in support base to higher levels. The options band signifies immediate trading band is between 10,300 and 10,600 levels.

India VIX fell sharply for the third consecutive session by 7.11 per cent to 12.18. The VIX has fallen 27 per cent in last three sessions and needs to hold below the 13-12.50 zone to get a smooth ride.

Bank Nifty formed a small bullish candle on the daily chart and closed with a gain of around 0.50 per cent. It has to hold above 25,600 to extend its move towards 25,950-26,000 zone, while support exists at 25,400, and then 25,250 levels.

Nifty futures closed with a gain of 0.65 per cent at 10,472. Long buildup was seen in Page Industries, OFSS, M&M, Jet Airways, Titan, Hero MotoCorp, Motherson Sumi, Britannia, SRF, TVS Motor, CEAT, Maruti, Bajaj Auto, Shriram Transport Finance, BPCL, Bharti Airtel, Biocon, UBL, SAIL, Amar Raja Battery and Vedanta, while shorts were seen in Reliance Infra, Union Bank, Wipro and HCL Tech.

(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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