F&O: Nifty breaks rising support trend line in weak signal for bulls

Nifty opened negative on Monday and made a new lifetime high of 13,777, but failed to hold the immediate support at 13,600 level and nosedived sharply to 13,131 level. The index negated the formation of higher highs and lows on the weekly scale and broke the rising support trend line on the daily scale, which doesn’t bode well for the bulls after the strong movement of last many weeks.

Techanical indicators are turning negative from the overbought territory. So one needs to stay light as long as the index doesn’t get stability. Now as long as it doesn’t surpass the 13,450-13,500 zone, profit-booking decline is possible towards the 13,131 and 13,000 levels.

India VIX rose sharply by 24.54% from 18.62 to 23.19 levels. The spike in volatility from lower levels and a cross above the 23 mark indicated short-term pressure on the market as long as it doesn’t cool down below the 19 mark.

On the options front, maximum Put open interest was seen at 13,000 level followed by 13,200 level, while maximum Call OI was seen at 14,000 followed by 13,000 levels. There was marginal Call writing at 13,800 and then 13,700 levels, while Put unwinding was seen at all immediate strike prices. Options data suggested a wider trading range between 13,000 and 13,750 levels.

Bank Nifty opened negative and witnessed sustain selling pressure throughout the day. It corrected by around 1,400 points from the intraday high of 30,700 and closed the session with a loss of around 1,250 points. The index formed a Bearish Belt Hold candle on the daily scale and negated the higher highs and lows on the weekly scale. Now, as long as it remains below the 30,000-30,200 zone, weakness can persist and take Nifty to the next support in the 29,000-28,800 zone.

Nifty futures closed negative with a 3.51% loss at 13,290 level. Weakness was seen in most of the counters, mainly in RBL Bank, BHEL, PVR, IndiGo, Federal Bank, Tata Motors, Canara Bank, GAIL, IndusInd Bank, BPCL, Escorts, Shriram Transport Finance, HPCL, M&M Financial, Ambuja Cement, Concor, Ramco Cement and ITC.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)