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F&O: VIX shows bullish bias; Bank Nifty negates lower highs & lows

By Chandan Taparia

Nifty50 had a roller-coaster ride on Wednesday, as it opened with marginal losses, but remained highly volatile and finally managed to reclaim its bullishness to settle near the 12,050 mark. The index closed with the gain of around 50 points and formed a bullish candle similar to a Bullish Piercing Line pattern on the daily scale.

It took support around the lower end of the channel and 20 EMA on the daily chart for the second consecutive session. Market breadth remained in favour of the advancing counters, which is a positive sign for the market to retest its recent swing highs.

Now the index has to hold above 12,000 level to witness an up-move towards 12,158 and then 12,250 levels. On the flipside, strong support for Nifty is placed in the 11,935-11,950 range and then 11,880 level.

On monthly options front, maximum Put open interest was at 12,000 followed by 11,500 level, while maximum Call OI was at 12,500 followed by 12,000 level. We have seen Call writing at 12,400 while marginal Put writing was seen at 11,800 followed by 11,900 levels. Options data suggested a trading range between 11,900 and 12,300 levels.

India VIX fell sharply by 8.50 per cent to 13.32 level. A sharp cut in the volatility index suggested that bullish bias could continue. Investors can have a ‘buy on decline’ strategy in this market.

Bank Nifty managed to hold key support in the 31,400-31,500 zone and witnessed a decent recovery towards the 32,000 mark. It negated the formation of lower highs and lows of last three sessions and formed a Bullish Engulfing Pattern on the daily chart. Momentum oscillator RSI took support at 60-62 levels and started moving northward, which certainly bodes well for the bulls.

As long as it holds above 31,500 level, the rate-sensitive index could lead the broader market by heading towards its lifetime high of 32,157 and then see a fresh rally towards 32,500 level, while strong support is placed near the 31,400 mark. The Banking Index could see volatility ahead of RBI’s money policy.

Nifty futures closed positive at 12,092 level with a gain of 0.38%. Long buildup was seen in Mindtree, Dish TV, Apollo Hospitals, Tata Motors and NMDC while shorts were seen in Godrej CP, L&T, Escorts, HPCL and Reliance Industries.


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

Source: Economic Times