F&O: Nifty negates higher lows; rising VIX adds to bearishness

Nifty opened flattish on Friday and moved southward through the day in line with the weak global cues. It breached Thursday’s low and fell by more than 250 points to 14,350 level. The index saw a decline due to profit booking as selling pressure emerged across sectors and closed the session with a loss of around 160 points. The index formed a bearish candle on the daily scale and negated the formation of higher lows of last six sessions.

On the weekly charts, the index formed a Spinning Top candle, but continued to form higher highs for the 11th week. Now, Nifty has to hold near the 14,350 level to ensure bullish grip to take it towards 14,600 and then 14,750 levels, while on the downside, major support exists at 14,300 and 14,200 levels.

India VIX rose 4.61% from 23.02 to 24.09 levels. Volatility spiked by around 24% this week, which caused a pause in the positive momentum. The VIX needs to cool down below 20 level to again get the bullish stance.

On the options front, maximum Put Open Interest stood at 14,000 level followed by 13,500, while maximum Call OI was seen at 15,000 level followed by 14,500. There was Call writing at strike prices 14,500 and 14,600, while Put writing was seen at 13,500 and unwinding at 13,700. Options data suggested a wider trading range between 14,000 and 14,800 levels, while the immediate trading range stood between 14,300 and 14,600 levels.

Bank Nifty opened flattish and slipped alongside the broader market. It moved in a wider range of 500 points and saw some recovery in the last hour of day. It closed the day with a loss of around 270 points. The index formed a bearish candle on the daily scale and a Doji on the weekly chart, which indicated the absence of followup action at new highs. Now, the index has to hold near the 32,000 mark to witness a bounce towards 32,500 and 32,750 levels, while on the downside support exists at 31,750 and 31,500 levels.

Nifty futures closed negative at 14,460 level with a loss of 1.15%. The trade setup looked positive in Tata Motors, IDFC First Bank, Bharti Airtel, Apollo Hospital, UPL, PVR, PEL and Grasim but weak in TechM, HCL Tech, Apollo Tyre, NMDC, Hindalco, Asian Paint, Motherson Sumi, UltraTech Cement, Divi’s Labs, Havells, Jubilant Foodworks, Colgate-Palmolive, MGL and Nestle India.

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