F&O: Nifty setup shows followup action missing, but VIX stays bullish

By Chandan Taparia

Nifty50 opened with gap up above the immediate hurdle at 11,300 level and headed towards the 11,373 level on Tuesday. However, it remained rangebound for most part of the session, as it traded in range of 50 points. The index closed above the 11,300 level and has been making higher lows since last six sessions, which indicated an overall bullish stance.

Technically, Nifty formed a Doji candle on the daily scale, which signalled the absence of follow-up action at key resistance zones. Now, it has to hold above 11,200 level to witness an up-move towards 11,500 level and higher, while on the downside support exists at 11,200 and then 11,150 levels.

India VIX fell 5.11 per cent to 21.36 level. Volatility has been falling from last six sessions and a gradual decline in VIX suggests the bulls are using any decline as a buying opportunity while the overall trend could remain bullish for a decisive range breakout.

Maximum Put open interest stood at 11,000 level followed by 10,000, while maximum Call OI was at 11,500 followed by 12,000 levels. Minor Call writing was seen at 11,700 and 11,800 levels while there was Put writing at 11,000 and 11,300 levels. Options data suggested an immediate trading range between 11,000 and 11,500 levels for the coming few days.

Bank Nifty opened positive and remained consolidative for most part of the session as it moved up towards 22,250 level. It relatively outperformed the benchmark index and formed a bullish candle on the daily scale. The technical indicators have seen a bullish crossover and require follow-up buying to confirm the next momentum. Now, the index has to hold above 22,000 level to witness an up-move towards 22,500 and then 22,750 levels, while on the downside immediate support is seen at 21,750 and then 21,500 levels.

Nifty futures closed positive at 11,349 level with a gains of 0.49 per cent. The trade setup looked positive in Axis Bank, JSW Steel, Jindal Steel, ITC and BPCL and weak in Shree cement, Titan, UPL, Cipla and Bharti Airtel.

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