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F&O: Lower volatility may help Nifty draw buying interest to move higher

By Chandan Taparia

Nifty50 had a gap up opening for the seventh session and hit a new all-time high at 12,268 on Thursday. From last few sessions, market breadth has remained strongly in favour of the bulls and as a result, the index continued to make higher highs and lows for the sixth session and formed a positive candle on the daily scale.

Momentum oscillator RSI is also signalling a breakout on the daily scale and, thus, we may see continuation of the ongoing optimism in the coming days. As long as Nifty sustains above 12,150, we may see an up-move towards the 12,350 – 12,400 zone. Nifty’s major support is now shifting higher towards the 12,100 – 12,150 zone.

In monthly options, maximum Put open interest was at 12,000 followed by 11,500 level, while maximum Call OI was at 12,300 followed by 12,400 level. There was meaningful Put writing at 12,200 and 12,100 levels, while Call writing was seen at 12,400 followed by 12,500 levels. Options data suggested a shift trading range to a higher zone between 12,050 and 12,350 levels for the coming sessions.

India VIX fell 1.76 per cent to 12.12 level. Lower volatility may support the index to attract fresh buying interest.

Bank Nifty continued to make higher highs and lows for the sixth consecutive session and formed a Dragonfly Doji candle for the second consecutive session, which indicated that intraday declines are getting bought into. The banking index is sustaining well above its consolidation breakout level.

Considering the overall chart structure, we reiterate our positive view for an up-move towards the 32,500 – 32,750 zone. But major supports remain intact in the 32,000 – 31,750 zone.

Nifty futures closed positive at 12,272 with 0.24 per cent gain. There was long buildup in SRF, TCS, Eicher Motors, TVS Motors and Escorts, while shorts were seen in Indiabulls Housing Finance, Vedanta, Grasim, IndiGo and BHEL

(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