The NSE Nifty opened in the positive zone on Monday, but was unable to completely fill its falling gap of 10,436-10,380 zone and corrected towards the 10,220 level in the last hour of the session.
The index formed a bearish belt hold candle on the daily chart, as it witnessed selling pressure throughout the day. It gave the recent second-lowest daily close, and price setup suggests that the bounce is being sold in the market.
Now, till Nifty holds below the 10,350 level, it could slip towards its crucial support of 10,200 and then swing low of 10,138 mark. On the upside, crucial hurdles are at 10,450-10,480 levels.
On the option front, maximum Put OI stood at at 10,000 followed by 10,200 strike, while maximum Call OI was at 10,500 followed by 11,000 strike.
We have seen meaningful Call writing at 10,300 level followed by 10,400, while Put writing was seen at 10,200 followed by 10,000 strike. Option band signifies a shift in lower trading range with immediate support below 10,200 mark.
India VIX moved up by 7.92 per cent to 21.36 on Monday. Spurt in volatility suggests that the upside could be restricted again in the market. Recent high of VIX was at 21.76, and above that It could head towards the 24 level.
Bank Nifty index opened gap-up, but failed to hold above the 25,500 level, and wiped out its entire gains in the second half of the session. It formed a Doji candle with long higher shadow, which indicates that the bears were aggressive at higher zones.
Now, the index has to cross and hold above the 25,250 level to witness a bounce towards 25,500, while a hold below 25,000 could drag it towards 24,650 zone.
Nifty future closed 0.64 per cent down at 10,237. Longs were seen in UBL, ICICI Bank, Justdial, Tata Elxsi and HDFC Bank, while shorts were seen in RBL Bank, Concor, Canara Bank, Titan, Ambuja Cements and Idea.
(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