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F&O: Nifty makes higher highs, but Doji on weekly chart signals indecisiveness

By Chandan Taparia

Nifty kickstarted the January derivative series on a positive note on Friday, as it opened with an upside gap and continued to make higher highs throughout the session.

Eventually, the index concluded the session a tad below the 12,250 mark and formed a positive candle on the daily chart. The index formed a Doji candle on the weekly chart. It moved within the trading range of the penultimate week and thus formed an Inside Bar pattern on the weekly chart, indicating indecisiveness among market participants.

Nifty breached the sequence of lower highs and lows of last three sessions. As long as it sustains above its support at 12,100, we maintain a positive stance on the market for an up-move towards 12,350 and then 12,400 levels.

On January options front, maximum Put open interest was at 12,000 followed by 11,500 level, while maximum Call OI was at 12,500 followed by 12,200 level. There was Call writing at strike prices 12,700 and 12,500 and Put writing at 12,000 and 12,200. Options data suggested a wider trading range between 11,900 and 12,500 levels.

India VIX fell 5.35 per cent to 10.52 level. It is currently hovering around its strong support zone at 10 – 11 and should see a reversal in the coming days.

Bank Nifty took support on a Rising Trendline on the daily chart and rallied sharply. It posted the highest-ever daily and weekly close and formed a positive candle on the daily chart. The banking index is making higher highs and lows for second consecutive week and formed a Dragonfly Doji candle on the weekly chart, which indicated buying interest at lower levels.

Till the time, the index sustains above its immediate support at 32,000 level, we may see an up-move towards the 32,750 – 33,000 zone.

Nifty futures closed at 12,327 level with a gain of 1.07 per cent. Long buildup was seen in MRF, PFC, Bank of Baroda, Page Industries and Jubilant Foodworks, while shorts were seen in YES Bank, Jindal Steel, ICICI Pru Life, Voda Idea and NIIT Tech.

(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