F&O: Options shift Nifty trading range to 10,400-10,650 levels


By Chandan Taparia

The Nifty50 index opened in the positive, but failed to hold above the 10,600 level and corrected towards the 10,511 level on Thursday. The index remained highly volatile through the day and finally closed near its opening level. In the process, it formed a Doji candle on the daily chart.

It has been facing a hurdle at its 50-day EMA for last seven sessions and a cluster of supply is visible in the 10,600-10,650 zone. Now, if the Nifty50 sustains below 10,480, then weakness could continue till 10,400 and then 10,333 levels, while on the upside, immediate hurdles are seen at 10,600 and then 10,650 levels.

On the options front, maximum Put open interest stood at 10,500 followed by 10,000 while maximum Call OI was at 11,000, followed by 11,100. Fresh Call writing was seen at strike prices 10,650, 10,750 and 11,000, while Put writing was seen at 10,400, 10,500, 10,550 and 10,600.

Sustained Call writing as well as Put writing kept the index in a trading range with high volatility. The option band signified a broader trading range between 10,400 and 10,650 levels.

India VIX fell 5.03 per cent to 16.31.

Bank Nifty formed a Harami candle on the daily scale, which indicated buying interest on declines even after the weakness in PSU banks. Bank Nifty has been underperforming the Nifty index from the past couple of sessions. Now, if Bank Nifty sustains below 25,200 level, then fresh selling could be seen towards 25,000 and then 24,500 levels, while on the upside, hurdles are seen at 25,750 level.

Nifty futures closed in the positive at 10,557 with a gain of 0.60 per cent. Long buildup was seen in Apollo Hospital, HUL, Hexaware, PowerGrid and ICICI Bank and DHFL, while shorts were seen in PNB, Voltas, DCB Bank, Jain Irrigation, KPIT, Motherson Sumi, Grasim, Sun TV, Idea and Jet Airways.

(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