F&O: Bulls showing dominance in key support zones

Nifty opened negative on Monday, but managed to hold its support near 15,500 level and recovered well towards 15,765 level. It witnessed sustained buying interest throughout the day and closed with a gain of around 60 points. It formed a strong bullish candle after the profit-booking declines of last three sessions, which indicate that the bulls are having a dominance in key support zones. Now, it has to hold above 15,700 level to witness a bounce towards 15,900 and 16,000 levels, while on the downside, support can be seen at 15,600 and 15,550 levels.

India VIX moved up 1.76% from 14.80 to 15.06 level. India VIX came to the levels of February 2020 from where it had spiked to higher levels. Lower volatility indicates an overall bullish market bias, but a small bounce in VIX could give some volatile cues to the market.

On the options front, maximum Put Open Interest stood at 15,500 followed by 15,000 while maximum Call OI was seen at 16,000 followed by 15,800 levels. Call writing was seen at strike prices 16,000 and then 15,900 while noticeable Put writing was seen at 15,600 and then 15,500. Options suggest a trading range between 15,500 and 16,000 levels.

Bank Nifty opened negative but managed to respect previous day’s low of 34,900 zone, and recovered well by around 1,000 points from lower levels. It took support near to its 50 DEMA and also formed a Bullish Engulfing Pattern near the key support forming lower tops and bottoms for 11 sessions. Now, the index has to hold above 34,500 level to move towards 35,250 and 35,500, while on the downside, support exists at 34,250 and 34,000 levels.

Nifty futures closed positive with gains of 0.34% at 15,749 level. Among specific stocks, the trade setup looks bullish in GMR Infra, NTPC, NMDC, PEL, UBL, MFSL, DLF, Torrent Power, Tata Power, BEL, HUL, Titan, SBI, Bajaj Finserv, Bata India, Bandhan Bank, Gujarat Gas, Pidilite Industries, Sun TV, Reliance and Grasim but weak in UPL, PVR, SRF and Colpal.

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