By Chandan Taparia
The Nifty50 index opened positive and witnessed sustained buying interest for most part of Friday’s session, as it headed towards the 10,500 mark. It managed to reclaim its lost ground after Thursday’s sharp decline and closed with a decent gain of over 200 points.
The index formed a bullish candle with a Morning Star pattern, which indicated that a small follow-up buying could confirm a short-term reversal of its recent downtrend. It formed a Hammer candle on the weekly scale with a positive close after the correction of last five weeks.
The index has taken support at the lower band of the rising channel on the weekly scale by connecting the major swing lows of 6,825, 7,893 and 10,200 levels on weekly chart. Now it has to hold above multiple hurdles in the 10,450-10,480 zone to witness an upward move towards the 10,600-10,650 zone, while on the downside immediate support is seen at 10,350.
On the options front, maximum Put open interest stood at 10,000 followed by 10,200, while maximum Call OI was at 11,000 followed by 10,800. There was Put writing at 10,400 followed by 10,300 while Call unwinding was seen at all immediate strike prices. The option band signified a broader trading band between 10,300 and 10,600 levels.
India VIX fell 8.34 per cent to 18.83. The topping out formation of VIX suggested that some rescue could be seen in the market. Now, VIX has to cool down below the 17.50-17 zone to signal consolidation or buying interest in the market.
Bank Nifty opened positive and witnessed a strong momentum towards 25,500. It formed a bullish candle on the daily and a Bullish Engulfing on the weekly scale, which indicated that the bulls are back in charge in the market. It formed a bottom pattern on the daily scale and a hold above 25,250 could take it towards 25,650 and then 26,000 levels, while support has shifted higher to 25,000.
Nifty futures closed positive at 10,485 with a gain of 2.28 per cent. Longs were created in SRF, Bata India, PVR, Bajaj Finance, TVS Motor and Coal India while shorts were seen in TCS, HCL tech, Torrent Pharma and Aurobindo Pharma.
(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)
Source: Economic Times