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F&O: Nifty needs to break its trading range, else it will widen

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Nifty50 failed to hold above 11,888 level on Friday and consolidated for most part of the day, but strong selling pressure emerged in the last hour of the session. The index formed a bearish candle on daily and weekly scales, which signalled selling pressure at higher levels. The index has been consolidating between 11,761 and 12,041 levels for 14 sessions now and requires a decisive range breakout to commence the next leg of rally. Else, it is likely to move in a broader trading range.

As long as it holds below 11,888, Nifty could extend its weakness towards the lower band of the support range at 11,761 and then see a fresh decline towards 11,660 level, while on the upside immediate hurdles are seen at 11,965 and then 12,000 levels.

On the options front, maximum Put open interest was at 11,500 followed by 11,800 levels, while maximum Call OI was at 12,000 followed by 12,500. There was Call writing at 11,900 followed by 12,000 levels, while Put unwinding was seen at 11,800 and then 11,700 levels. Options data suggested a wider trading range between 11,750 and 12,100 levels.

India VIX moved up 2.10 per cent to 13.94 level. However, volatility is hovering below the 15 mark, which supports buying interest on any decline. At the same time, it rules out any major swing in the market.

Bank Nifty failed to surpass the previous day’s high and declined nearly 400 points to close near the lower band of the trading range near 30,600 level. It formed a bearish candle on the daily as well as on weekly scales, which suggest the bears are holding a tight grip at higher levels. As long as it holds below 31,000, the index could extend its weakness towards 30,250 and then 30,000 levels, while on the upside, hurdles are seen at 31,000 and then 31,313 levels.

Nifty futures closed negative at 11,829 level with a loss of 0.83 per cent. Long buildup was seen in Manappuram Finance, Wockhardt, Tata Communications and Jet Airways while there was shorts buildup in Ajanta Pharma, BEML, Just Dial, DHFL and Escorts.

Source: Economic Times