By Chandan Taparia
The Nifty50 opened in the negative zone on Thursday and remained under pressure for most part of the session to hit a fresh seven-month low of 10,080 during intraday trade.
However, the index formed a small bodied candle, as it recovered from the days low, but follow up buying was missing at the higher levels.
Nifty has been trading in the deep oversold territory with divergence of mechanical indicators, but bounces are being sold and the negative trend remained intact.
Now, till the index remains below 10,200, overall weakness could continue towards next major support of psychological 10,000 and 52-weeks low at 9,952 level. On the upside, Nifty needs to cross and hold above the 10250 level to get any sign of temporary relief or bounce back in the market.
Option data was scattered at all the immediate prices, as it was beginning of the new series. On the option front, maximum Put OI was at 10,000 followed by 10,200 strike, while Call OI congestion was seen at 11,000 followed by 10,500 strikes. We have seen Call writing at 10,300 followed by 10,200 strike, while Put writing was seen at 10,000 followed by 10,100 strike.
India VIX remained flattish with a marginal gain of 0.44 per cent at 18.96 levels. Volatility is not cooling down further and that is the concern for the market. Vix has to go down below 17-16 to rescue the bulls after the sharp cut of the last two months.
Nifty Bank index formed a Doji candle, as it remained in a range of 200 points after a negative opening. The index has been respecting its major support of 24,650, while on the upside multiple hurdles are restricting its momentum to surpass the 25,350-25,500 zone. Now, Nifty Bank has to cross and hold above the 25,000 level to witness an upmove towards 25,250 and then 25,500, while on the downside, supports are seen at 24,650 and below that fresh decline towards 24,444 and lower levels could be seen.
Nifty futures closed in the negative with a loss of 1.02 per cent at 10,124. Most of the sectoral indices were in the pressure and rollover data suggests that shorts rolled into the next series.
(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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