Nifty Analysis: F&O: Nifty setup shows bounce may sustain, but hurdles ahead


By Chandan Taparia


Nifty opened positive on Friday and witnessed a rebound of around 100 points towards the 11,789 level as it managed to hold the previous day’s low at 11,661 level. The index formed a Bullish Hammer candle with a longer lowe r shadow on the daily scale, indicating that the bulls were able to fight back. The index remained consolidative near the 11,750 level for most part of the session, but formed a bearish candle on the weekly scale.

Overall, the price and data setup showed a bounce may occur, but multiple hurdles at higher zones could keep the upside of the market restricted over the next few sessions. The index now has to hold above 11,750 level to witness a bounce towards the 11,850 mark, while on the downside, support exists at 11,666 and then 11,550 levels.

India VIX fell 1.88 per cent from 22.06 to 21.64 levels. It needs to cool down below 19 level for the market to stabilise, but there could be a spike in volatility ahead of the US elections.

On the options front, maximum Put open interest was seen at 10,500 level followed by 11, 000, while maximum Call OI was at 12,500 followed by 12,000 levels. There was Call writing at 11,700 and 12,100 levels and Put writing at 11,700 and then 11,500 levels. Options data suggested a wider trading range between 11,400 and 12,000 level while the immediate trading range was seen between 11,500 and 12,000 levels.

Bank Nifty opened positive and witnessed buying interest towards 23,650 level after taking support in the 23,150-23,200 zone. It formed a bullish candle on the daily scale and a bearish candle on the weekly chart, which suggested a rangebound bias in the broader trading range. Now, the index has to hold above 23,500 level to witness a rise towards 23,750 and 24,000 levels, while on the downside, support exists at 23,150 and then 23,000 levels.

Nifty futures closed positive at 11,766 level with 0.69% gain. The trade setup looked positive in JSW Steel, Tata Steel, Voltas, Hindalco, Divi’s Lab, SRF, Muthoot Finance, HDFC Bank, Grasim, ACC, Ultratech Cement, Ambuja Cement and Tata Chemicals and weak in UPL, Zeel, M&M, RIL, Sun Pharma and Vedanta.

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





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