F&O: Nifty50 has to hold above 13,800 to rally towards 14,000

Nifty opened with a gap up and saw continued strength as it headed towards a new lifetime high at 13,967 in the initial hour of trade. After that, a small dip occurred as a result of profit booking.

The index remained rangebound in the second half of the session and settled the day 60 points higher. It formed a bullish candle on the daily scale and made higher lows for the fifth session in a row. Now, the index has to hold above 13,800 level to witness a fresh rally towards 14,000 and then 14,200 levels, while on the downside, major support exists at 13,777 and 13,700 levels.

India VIX moved up 1.76% from 20.42 to 20.79 levels. A drop in volatility is supporting the bullish market setup and VIX needs to hold below 19 mark to help the bulls continue their grip on the market.

On the options front, maximum Put open interest was seen at 13,000 level followed by 13,500, while maximum Call OI was at 14,000 followed by 14,300 levels. There was Call writing at 14,300 and then 14,100 levels, and Put writing at 13,900 and 13,800 levels. Options data suggested an immediate trading range between 13,700 and 14,200 levels.

Bank Nifty opened with a gap up and all the banking stocks moved northward which resulted in the Nifty headed towards the 31,360 mark. It saw the highest daily close of last 218 sessions with a gain of 441 points. Nifty formed a bullish candle on the daily scale and continued to form higher highs and lows for the fourth session. Now, it has to hold above 31,000 level to witness a bounce towards 31,500 and then 31,750 levels, while on the downside, support exists at 30,800 and 30,500 levels.

Nifty futures closed positive at 13,932 level with a gain of 0.30%. The trade setup looked positive in IndusInd Bank, IGL, MGL, TechM, Axis Bank, ICICI Bank, HDFC, Mindtree, Dabur, Infosys and Siemens but weak in Jindal Steel, Hindalco, Nestle India, Coal India and NTPC.

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