F&O: Call writing at 10,200, 10,600 levels restricting Nifty’s upside
By Chandan Taparia
The Nifty50 index opened flattish and witnessed sustained selling pressure throughout the day on Wednesday. Recently, it had broken the swing low support at 10,276 after the consolidation of last 18 sessions and started the fresh decline.
The index continued its weakness and has been forming lower lows for the past six sessions.
Nifty formed a Bearish Belt candle on the daily scale, which indicates that the bears are holding the grip on the market. Now, a hold below 10,276 could continue weakness towards 10,100 then 10,077-10,033 zones, while on the upside hurdles are seen at 10,276 then 10,333 zones.
Index has seen a correction of around 1,000 points from the top of 11,171 and now immediate support exists near to 10,100 zones, which is 200-EMA on daily scale.
On the option front, maximum put open interest is at 10,000 followed by 10,200 strikes, while maximum call open interest is at 10,600 followed by 10,500 strike.
We have seen significant call writing at 10,200 followed by 10,600 strikes, which is restricting Nifty's upmove, while minor Put writing is seen at 10,200 followed by 10,100 levels, which may give a pause in negative momentum for a consolidation move.
Option band signifies a shift in lower trading range between 10,000 and 10,350 zones for next coming sessions.
India VIX fell down by 3.26 per cent at 15.71 and decline in volatility even after new lows in index suggests that 200-DEMA and psychological 10,000 zones could arrest the immediate fall on market.
Bank Nifty opened negative and witnessed a sharp decline towards 24,096 zones. It has corrected by more than 900 points in last two trading sessions and supply is clearly visible in most of the PSU and private banks. It formed a bearish candle on a daily chart and given the recent lowest daily close.
Now, till it holds below 24,500 zones, weakness could continue towards 23,900 then 23,700 zones while on the upside hurdles are seen at 24,650 zones.
Nifty futures closed with the loss 0.74 per cent at 10,177. Built up of long position were seen in selective IT and FMCG counters, while shorts were seen in metal, NBFC, auto, cement and capital good stocks.
(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)