By Shivangi Sarda
The Nifty 50 index opened positively on Wednesday but witnessed pressure in the higher zones, falling to 16300 zones, followed by a recovery of more than 200 points. However, it gave up all of its intraday gains and drifted lower in the second half of the session to close with losses of around 60 points. It formed a bearish candle on the daily scale and made lower lows from the last three sessions.
India VIX fell 2.85% from 20.42 to 19.83 levels. Volatility has cooled off after a rough ride to the market, but needs to drop below 18 zones before bulls can bounce back. In terms of options, the max call OI is 17500 and then strike 17000 while the max put OI is 16000 and then strike 15500. Call writing is seen at 16400 and then at 16700 strike while small Put writing is seen at 16300 strike. Options data suggests an immediate range between 16200 and 16600 zones, while a wider trading range is between 16000 and 16800 zones.
Bank Nifty opened positively and moved upward in the first half of the session, but slumped down in the latter part. It closed above its 50 EMA with losses of around 50 points, but made lower lows from the last four sessions. It formed a bearish candle on the daily scale with a longer upper shadow indicating selling pressure visible in higher zones.
For monthly Bank Nifty, the maximum Put OI is 34500, then 34000 strike and the maximum Call OI is 36000 and then 35500 strike. We have seen Call write at 35500 with settling at 37000 while Put writing is observed at 34600 with settling at 35000 staking. Now it must have significant support at 34750 zones, to witness a jump to 35250 and 35500 zones, while at the bottom support exists at 34750 and 34500 levels.
On a sector basis, except for FMCG, Banking and Financial Services, all other sectors traded in the positive area from which Media, Realty and IT stocks were strongest.
Now, Nifty must maintain the main support of 16250-16300 zones to witness a jump to 16550 and 16666 zones, while at the bottom support exists at 16161 and 16061 levels. Traders are advised to buy on decline with positive stock-specific action in Cholafin, SBI, HDFC AMC, Bank of Baroda, TCS, M&MFin, Bandhan Bank, Maruti Suzuki India, TVS Motor, MFSL and Hero Moto Corp while weakness in Gujarat Gas, Deepakntr , Polycab, ICICI General Insurance, bharti Airtel, LIC Housing Finance, Bata India, SRF, Havells, UPL, MRF, Pidilitind and Dabur.
(Shivangi Sarda is an Analyst – Equity Derivatives & Technicals, Broking & Distribution at Motilal Oswal Financial Services Ltd. The views expressed are those of the author. Please consult your financial advisor before investing.)