F&O: Put writing signals Niftys supports shifting higher; VIX still a worry
By Chandan Taparia
The Nifty50 opened in the positive zone on Monday and extended gains towards the 10,774 level. The index closed above its 50-DEMA by forming a bullish hammer pattern on the daily chart, which indicates that every small decline was being bought.
The index has been making higher lows from the last four sessions and continued its momentum after the recent consolidation breakout above the 10,650 mark. Now, Nifty has to continue to hold above 10,650 to extend its gains towards 10,850-10,880 zone. On the downside, support exists at 10,600 level.
Meaningful Put writing was seen at 10,700 followed by 10,600 strike, which indicates supports are shifting higher, whereas Call unwinding was seen at all the immediate strike with minor Call writing at 11,000 strike. Options band signifies a broader trading range between 10,600 and 10,850 levels.
India VIX moved up by 4.93 per cent to 19.26 levels. Volatility moved up even after the upmove in Nifty. It has to cool down below 17-16 zone to get the next leg of smooth upside rally in the market.
Bank Nifty opened positive, but remained in a small trading range. It has been making higher lows, but pace of buying is getting lesser, which requires some consolidation to extend its further move. Now, it has to continue to hold above the 26,100 level to witness an upmove towards 26,500 and then 26,750 level, while on the downside support are seen at 25,800-25,750 zone.
Nifty futures closed in the positive zone with a gain of 0.83 per cent at 10,776. Built up of long positions were seen in HCC, CG Power, SRF, Federal Bank, Ultratech Cement, IndusInd Bank, Ajanta Pharma and Dabur while shorts were seen in Siemens, ACC, NTPC, IndiabullsHousing Finance, Bata India and ONGC.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)