Chandan Taparia
Nifty managed to hold its support of 11,650-11,666 and rallied around 200 points to head towards 11,850. It managed to record a highest daily close on May 24 after hitting life-time high of 12,040 on May 23.
It formed an Inside Bar on the daily chart and a Bullish Gap up candle on the weekly chart, which indicates that bulls are holding the tight grip in the market. Now it has to continue to hold above 11,750 to extend its move towards 12,000-12,040 while support is seen at 11,666-11,650.
India VIX fell down 41 percent in the last week from 28.08 to 16.55. During the week, it made a 44-month high of 30.18 but after the election outcome, it fell down drastically to 16.55. Decline in VIX suggests that now short-term stability and formation of a higher base is seen in the market.
For Nifty options, maximum Put open interest (OI) was at 11,000 followed by 11,500 while maximum Call OI was at 12,500 followed by 12,000. Put writing was at 11,700 while minor Call writing was seen at 12100, then 12,200. Option band signify a higher trading range of 11,600-12,100.
Bank Nifty has been making higher lows from last six consecutive sessions and closed the week with the decent gains of around 6 percent. It made a life-time high of 31,705 on election outcome day and gave the highest daily and weekly close above 31,200.
We have seen buying interest in most of the private and PSU Banks and a follow-up buying could lead them for fresh breakout territory. Now Bank Nifty has to hold above 30,500 to extend its move towards the recent high of 31,705 then a fresh rally towards 32,000 and 32,250 while major support exists at 30,250 that has provided major support for the last entire week.
Stock specific positive price setup is in ICICI Bank, DCB Bank, SBI, Bank of Baroda, UltraTech Cement, Grasim, Divi's Labs, Hero Motocorp and L&T. Now, mid and smallcap stocks are also showing a sign of momentum to catch the rally after a long consolidation.
(The author is Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited.)
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