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    F&O: Market under bear grip; VIX spike shows volatility to stay

    Synopsis

    As long as Nifty sustains below 11,000 level, any small bounce could be sold for further weakness towards 10,650-10,600 zone, while on the upside, the medium-term hurdle has shifted lower to the 11,111-11,250 zone.

    Bear-market-1---GettyGetty Images
    Higher volatility suggests bear grip on the market with the upside capped.
    By Chandan Taparia

    Nifty on Thursday opened negative in line with weak market trend and continued to decline towards the 10,800 zone. The bears took full control of the index in the last session of the September F&O series, as every small bounce got sold into and Nifty got dragged more than 300 points.

    The index has been making lower highs and lows on the daily scale since the last six sessions and was holding well below the 50 DEMA with a negative crossover on the weekly scale. As long as Nifty sustains below 11,000 level, any small bounce could be sold for further weakness towards 10,650-10,600 zone, while on the upside, the medium-term hurdle has shifted lower to the 11,111-11,250 zone.

    India VIX moved up 12.01 per cent from 20.99 to 23.51 levels. It has seen around 17 per cent spike this week to record its highest closing in 36 sessions. Higher volatility suggests bear grip on the market with the upside capped.

    Since it is the beginning of a new series, options data lay scattered at various strike prices. Maximum Put open interest stood at 10,500 level followed by 10,000, while maximum Call OI was at 11,500 followed by 12,000. There was marginal Call writing at strike prices 11,000 and 11,300 and Put writing at 10,600 and 10,500 levels. Options data suggested a wider trading range between 10,300 and 11,500 levels.

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    Bank Nifty continued to form lower tops and bottoms for the last six sessions and continued its weakness into the fourth consecutive week. It formed a bearish candle on the daily scale and resistance levels gradually shifted lower. The index started the day below a key support at 21,000 level and corrected around 700 points on a closing basis. As long as the index holds below the 21,000 level, weakness could continue till the psychologically important 20,000 level while medium-term hurdles exist in the 21,250-21,500 zone.

    Nifty futures closed negative at 10,806 level with 3.06 per cent loss. The trade setup looked positive in Apollo Hospital, Godrej Consumers, Vedanta, Colgate-Palmolive and Berger Paint and negative in Indiabulls Housing, IndusInd Bank, Shriram Transport, IndiGo, Tata Motors, Bajaj Finance, Canara Bank, RBL Bank, TCS, LIC Housing, Motherson Sumi, Ambuja Cement and PVR.

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



    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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