F&O: Higher lows for sixth session, rising support suggest bullishness

F&O: Higher lows for sixth session, rising support suggest bullishness

Nifty opened positive on Wednesday, but could not sustain at higher levels and saw a decline due to profit booking towards the 13,850 level in the initial hour of trade. However, the bulls managed to rebound well from the support zones and the index witnessed a strong momentum in the last hour to hit a new lifetime high of 13,997.

Nifty continued its winning streak for the sixth session in a row and remained only three points away from the psychologically important 14,000 mark. It formed a Doji candle on the daily scale with a long lower shadow, which indicated that every small decline is being bought into. The index is making higher lows for last six sessions and supports are gradually shifting higher. Now, the index has to hold above 13,850 level to witness a fresh rally towards 14,200 and then 14,500 levels, while major supports on the downside exist at 13,777 and 13,700 levels.

India VIX moved up 1.54 per cent from 20.79 to 21.11 levels. Rising volatility needs to cool down below the 20-19 zone to support the bullish market setup with a higher market base.

On the options front, maximum Put open interest stood at 13,500 level, followed by 13,900, while maximum Call OI was at 14,000 followed by 14,100 levels. Marginal Call writing was seen at 14,100 and then 14,050 levels, while there was Put writing at 13,900 and then 13,850 levels. Options data suggested an immediate trading range between 13,800 and 14,100 levels.

Bank Nifty opened positive, but failed to surpass the 31,500 mark and tested the immediate support at 31,000 level in the initial half. In the latter part of the day, the index saw a good recovery from lower levels, and managed to close on a flat note with a marginal loss of 20 points. The index formed a bearish candle on the daily scale, but continued to form higher high and low for the fifth session. Now, the index has to hold above 31,000 level to witness a bounce towards 31,500 and then 31,750 level, while on the downside, support exists at 30,800 and 30,500 levels.

Nifty futures closed positive at 13,980 level with 0.33% gain. The trade setup looked positive in SAIL, Ultratech Cement, Balkrishna Industries, UPL, Grasim, Bajaj Finance, ACC, Eicher Motor, Maruti, DLF, Dabur, Godrej Consumer, Tech Mahindra, Tata Steel, Asian Paint and Kotak Bank but weak in PNB, REC, Marico and Bharat Forge.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)

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