F&O: Buying emerges at every level; India VIX declines 7.86%

Nifty opened with a gap up on Tuesday, and the first half of the session saw a rangebound move. The latter part of the session saw strength building in the index, as it touched the 14,939 level and concluded the session with a gain of more than 150 points. It formed a bullish candle with a long lower shadow on the daily scale, which indicated that every decline is getting bought into.

The index continued to form higher lows for the past two sessions and closed near the key gap area of the Bearish Island Reversal pattern. Now, it has to hold above 14,750 level to extend its move towards 15,000 and then 15,150 levels, while on the downside, the immediate support exists at 14,750 and then 14,600 levels.

India VIX fell 7.86 per cent from 25.62 to 23.60 levels. The cooling down of VIX from the highs can provide some stability to the market, but it needs to hold below 22 level for the bullish grip to strengthen.

On the options front, maximum Put Open Interest stood at 14,000 level followed by 13,500, while maximum Call OI was at 16,000 followed by 16,500 levels. Call writing was seen at 15,400 and then 15,500 levels, while there was Put writing at 13,900 and then 14,600 levels. Options data suggested a wider trading range between 14,500 and 15,500 levels, while the immediate trading range is seen between 14,700 and 15,150 levels.

Bank Nifty opened with a gap up, but failed to hold above 35,750 level and drifted towards the 35,000 level. However, the index witnessed a decent recovery from the lows and settled the session with a gain of around 120 points. The index formed a Doji candle on the daily scale, as it closed near the opening levels, but the emergence of a long lower shadow indicates that every decline is getting bought into. Now, the index has to continue to hold above 35,000 to witness a bounce towards 36,000 and 36,250 levels, while on the downside support exists at 35,000 then 34,500 levels.

Nifty futures closed positive with gains of 1.25% at 14,982 level. On the stocks front, bullish setup was seen in BHEL, Tata Motors, Wipro, MFSL, Adani Ports, BEL, NTPC, Infosys, Chola Finance, Jubilant Foodworks, TCS, Cummins India, Voltas, TVS Motor, Grasim and Siemens while weakness in Dr Reddy’s, Manapupuram, ACC and Bank of Baroda.

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