F&O: Nifty negates lower tops & bottoms to give bullish vibes

Nifty on Tuesday opened with gap up in line with the global bourses and rose through the day. The index respected the key support at 14,350 level and headed towards the 14,550 mark. It closed the day with a decent gain of around 240 points with a strong advance - decline ratio. The index formed a bullish candle on the daily scale and negated the formation of lower tops and bottoms of last two sessions.

Now, it has to hold above 14,450 level to extend its move towards a lifetime high of 14,653 and then 14,750 levels, while on the downside major support exists at 14,350 and 14,200 levels.

India VIX slipped 6.16 per cent from 24.39 to 22.89 levels. Volatility needs to cool down below 20 level to commence a fresh leg of rally for a new lifetime high. However, volatility could be comparatively higher ahead of Budget 2021.

On the options front, maximum Put open interest stood at 14,000 level followed by 13,000, while maximum Call OI was at 15,000 followed by 14,500 levels. There was Call writing at strike price 15,000 and then 14,700, while Put writing was seen at 14,400 and unwinding at 13,500 levels. Options data suggested a wider trading range between 14,000 and 14,800 levels, while the immediate trading range is seen between 14,300 and 14,700 levels.

Bank Nifty opened with a gap up and remained consolidative in the first half of the session, but moved northwards in line with the broader market sentiment. Banking stocks performed well during the day and the rate-sensitive index headed towards the 32,500 mark.

It formed a bullish candle on the daily scale with a long lower shadow, which indicated that every decline is being bought into quickly. Now it has to hold above 32,200 level to witness a bounce towards 32,750 and 33,000 levels, while on the downside support exists at 32,000 and 31,750 levels.

Nifty futures closed positive at 14,572 level with 1.99% gain. The trade setup looked positive in IDFC First Bank, Chola Finance, Federal Bank, DLF, Tata Motors, REC, Havells, Grasim, Siemens, Lupin, L&T, Bata India, Voltas, Berger Paint, Apollo Hospital, Reliance and Bajaj Auto but weak in Tata Consumer.

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