F&O: Nifty’s bullish undertone intact; but rising VIX is a worry

Nifty opened with a gapup on Wednesday and made a new lifetime high at 14,653 in the initial tick. However, it could not sustain at higher level and slipped almost 220 points thereafter to test the intraday low of 14,435 level. The index witnessed a decent recovery in the concluding hour from lower levels, and settled the day on flattish note. It formed a Bearish Belt Hold sort of candle on the daily scale with a long lower shadow, which indicated that every decline was being bought into and the overall bullish undertone remains intact.

The index continued to form higher highs for the 15th trading session. It now has to hold above 14,400 level to witness a fresh move towards 14,750 and then 15,000 levels, while major support on the downside exists at 14,300 and 14,200 levels.

India VIX rose 1.94% from 22.84 to 23.29 level. Volatility needs to cool down below 20 level for Nifty to form the higher market base.

On the options front, maximum Put open interest stood at 14,000 level followed by 13,000, while maximum Call OI was seen at 15,000 followed by 14,000 levels. There was Call unwinding at all immediate strike prices, with minor Call writing was seen at 14,600 and Put writing at 14,100 and 14,000 levels. Options data suggested a wider trading range between 14,000 and 15,000 levels, while the immediate trading range stood between 14,300 and 14,800 levels.

Bank Nifty opened with a gap up and made an all-time high of 32,683 by surpassing the previous high of 32,613 level. The index witnessed some decline towards 32,150 level due to profit booking, but that triggered smart buying to take the index back towards the 32,600 mark. The index outperformed Nifty and formed a Doji candle on the daily scale with the highest daily close. Now it has to hold above 32,200 level to witness a bounce towards 32,750 and 33,000 levels, while on the downside support exists at 32,000 and 31,750 levels.

Nifty futures closed flat to negative at 14,591 level with a marginal loss of 0.05%. The trade setup looked positive in M&M, Adani Ports, SBI, DLF, Canara Bank, Tata Chemicals, ITC, UBL, Axis Bank, ICICI Bank, SRF and Infosys but weak seen in Shriram Transport Finance, Muthoot Finance, IndiGo, Bajaj Finance, ICICI Pru AMC, Bajaj Finserv, Petronet LNG, Biocon, Titan and Asian Paint.

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