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F&O: India VIX must cool down to 17-16% for Nifty to stabilise


By Chandan Taparia

NEW DELHI: The Nifty on Friday opened positive and witnessed buying interest in the latter half of the session to settle near the 10,700 zone. It managed to respect its previous day’s low and formed a Hammer candle on a daily chart, which indicates that decline was being bought into the market.

Now, till the index holds above the 10,650 level, it could extend gains towards 10,777 and then 10,850 zone, while on the downside, crucial support was seen at 10,600 level.

On the options front, maximum Put open interest was seen at 10,000 followed by 10,200 strikes, while maximum Call OI was at 11,000 followed by 11,500 strike.

Call writing was seen at 11,200 followed by 11,100 strike while Put writing was seen at 10,500 followed by 10,600 strike. Options band signified a trading band between 10,550 and 10,850 zones.

India VIX fell down by 3.37 per cent at 18.65 level. However, it has to cool down below 17-16 zones to get the smooth ride to surpass immediate hurdle zones.

Bank Nifty erased previous day’s losses and witnessed buying interest for most part of the session. It also negated its formation of lower highs and lower lows and rallied more than 400 points. It formed a Bullish Belt Hold on the daily scale, which implies that buying was visible at lower levels. Now, it has to surpass and hold above 26,666 to extend its gains towards 27,000 and then 27,250, while on the downside, supports are seen at 26,500 and then 26,350 levels.

Nifty futures closed positive with a gain of 1.14 per cent at 10,747. Built up of long positions were seen in Muthoot Finance, Kotak Mahindra Bank, Bata India and Siemens, while shorts were seen in HCL Technologies, IGL, Chola Finance, GAIL and Jubilant Food.

(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