By Chandan Taparia
Nifty continued to make lower highs and lows for the third consecutive session on Thursday. It formed a Bearish Belt Hold candle on the daily scale, which indicated bear dominance for most part of the session.
Despite a corrective move in the benchmark indices, the market breadth remained in favour of the advancing counters. Momentum oscillator RSI is showing triple negative divergence and turned southward on the daily chart, which doesn’t bode well for the bulls.
Since the index closed below its immediate support at 12,158 level, further correction towards the 12,050 – 12,000 zone cannot be ruled out. On the upside, the immediate hurdle is placed at 12,220 and the 12,300 levels.
Since it was the beginning of a new series, the options data was scattered over various strike prices. On the options front, maximum Put open interest was at 12,000 followed by 11,500 levels, while maximum Call OI was at 12,200 followed by 12,500 levels. There was Call writing at 12,200 and 12,400 levels while Put writing was seen at 12,000 and then 11,700. Options data suggested a wider trading range between 11,900 and 12300-12500 zones.
India VIX fell 4.28 per cent to 11.12 level. India VIX is currently hovering around its strong support zone at 10 – 11 levels and thus we expect a reversal in VIX in the coming days.
Bank Nifty made lower highs for the second consecutive session and formed a negative candle on the daily scale. The banking index breached its immediate support at the 32,000 mark and ended the session a tad below this mark. Currently, it is hovering around the lower end of the Rising Channel on the daily chart and a sustainable move below 31,900 level may lead to a correction towards the 31,700 – 31,500 range, while resistance can be seen in the 32,300 – 32,500 zone.
Nifty January futures closed at 12,193 with a loss of 0.82 per cent. There was long buildup in Metals, IT and NBFCs, while shorts were seen in Capital Goods, Infrastructure and PSU Banking space.
(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