F&O: Advance-decline ratio supports market momentum; VIX cools off 2%

By Chandan Taparia

Nifty opened with a gap up and continued its northward journey by surpassing its previous lifetime high of 12,430 level. During the day, it hit a fresh record high of 12,474 and remained consolidative in the entire first half of the session, as it partially filled the opening gap.

The bulls have taken a strong grip and taken Nifty to a new high. The index has seen the highest ever close with handsome daily gains of around 200 points. The advance-decline ratio supports the market momentum along with a broadbased rally in most of the sectors.

It formed a bullish candle on the daily scale along with runaway gaps and continued to make higher highs and lows for the fifth session in a row. Now, the index has to hold above 12,300 level to witness a bounce towards 12,600 and 12,750 levels, while on the downside, major support exists at 12,222 and 12,131 levels.

India VIX fell 1.89 per cent from 20.50 to 20.11 level. Volatility has cooled down significantly since last few sessions, which provides stability to the bulls to ride the all-time high territory.

On the options front, maximum Put open interest was seen at 12,000 level followed by 11,000 while maximum Call OI was at 13,000 followed by 12,500 levels. Marginal Call writing was seen at strike prices 12,900 and 13,000 while there was Put writing at 12,000 and then 12,400 levels. Options data suggested a wider trading range between 11,800 and 12,700 levels.

Bank Nifty opened with a gapup and continued its positive momentum towards the 27,600 level as buying emerged in all the banking stocks. The index continued to move upward throughout the day to eventually close the session with 2.75 per cent gain. It formed a strong bullish candle on the daily scale and has been making higher highs and lows since last six sessions. Now, it has to hold above the 26,850-27,000 zone to trigger a bounce towards 28,000 and higher levels.

Nifty futures closed positive at 12,480 level with 1.78% gain. The trade setup looked positive in Escorts, Divi’s Lab, Motherson Sumi, Axis Bank, Voltas, Bharti Airtel, ICICI Bank, IndiGo, Jubilant Foodworks, Hindalco, SRF, HDFC Bank, Tech Mahindra, Titan and Apollo Tyre, but weak in Glenmark, Cipla and Bharti Infratel.

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