The index formed a bearish candle similar to a Bearish Belt Hold pattern on the daily scale, but continued to form higher highs for the 11th
session. Now, it has to hold above the 14,000-14,050 zone to witness a fresh move towards the 14,250 level and then the 14,400-14,500 zone, while on the downside major support exists at 14,000 and 13,900 levels.
India VIX slipped 1.83% from 21 to 20.61 level. Volatility needs to cool down below 20 level to support the bullish market setup and fuel the next rally with a higher market base.
On the options front, maximum Put Open Interest stood at 13,000 level, followed by 13,500 level, while maximum Call OI stood at 14,000 and then 14,500 levels. There was minor Call writing at 14,200 and then 14,500 levels, while there was Put writing at strike prices 13,900 and 13,500. Options data suggested a wider trading range between 13,700 and 14,500 levels, while the immediate trading range stood between 14,000 and 14,400 levels.
Bank Nifty opened with a gap up and saw a slight dip in the initial hour of trade followed by an escalated move above the 32,150 level. However, a correction occurred in the second half of the session below 32,000 level and the index settled the session with a gain of around 150 points. The index formed a bearish candle on the daily scale as it closed below the opening level. Now, it has to hold above 31,750 level to witness a bounce towards 32,200 and then 32,500 levels, while on the downside support exists at 31,500 and the 31,200 levels.
Nifty futures closed flat to positive with a marginal gain of 0.09% at 14,201 level. The trade setup looked positive in IDFC First Bank, Bharat Forge, Shriram Transport, Sun TV, Ashok Leyland, Tata Steel, McDowell, Cummins India, Hindalco, NMDC, Bharti Airtel, M&M Financial, MFSL, Havells, Jubilant Foodworks, UBL, L&T and Voltas but weak in HUL, Nestle, HCL Tech, Biocon, NTPC and Maruti.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)