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F&O: Nifty’s overall trend remains positive; it’s a ‘buy on dips’ market

By Chandan Taparia

Nifty opened Tuesday’s session with a marginal loss and breached the sequence of higher highs and lows of last two sessions. The bears were active from initial trade, and continued to make lower lows as the day progressed. The index formed a negative candle on the daily chart even as it formed a Doji candle with a long lower shadow on the monthly chart.

The RSI oscillator showed a negative divergence on the daily chart, and thus, we may see small price or time correction in the coming days. The index is expected to move in the 12,000 – 12,300 range in the coming days.

However, the overall trend remains positive and we maintain our ‘buy on dips’ strategy till Nifty holds above the 12,100 level. On the upside, we may see an up-move towards the 12,250 – 12,300 zones, while on the downside, support was seen at 12,100 and then 12,000 levels.

In January options, maximum Put open interest stood at strike price 12,000 followed by 11,500, while maximum Call OI was at 12,500 followed by 12,200 levels. There was Call writing at strike prices 12,300 and 12,500 while Put writing was seen at 11,800 and 11,500. Options data suggested a wider trading range between 11,900 and 12,500 levels.

India VIX moved up 5.97 per cent to 11.66 level. It is currently hovering around its strong support zone at 10 – 11 ,and thus, we expect it to reverse in the coming sessions.

Bank Nifty formed the same open and high and corrected 0.60 per cent to form a negative candle on the daily chart, while it gained 0.67 per cent and formed a Doji candle on the monthly scale. The index is consolidating in a broader range between 32,000 and 32,600 levels. While buying interest emerged around the 32,000 mark, supply was witnessed in the 32,500 – 32,600 zone. As long as Bank Nifty sustains above the 32,000 mark, we will maintain our positive stance on the index for an up-move towards the 32,500 – 32,600 zone.

Nifty futures closed negative at 12,248 level with a loss of 0.65 per cent. Long buildup was seen in PFC, Jubilant Foodworks, NMDC, Coal India and NTPC, while shorts were seen in Zeel, PEL, TechM, Bajaj Auto and RIL.

(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