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F&O: Nifty forms higher highs and lows; VIX drops to give bullish vibes

Nifty opened positive on Tuesday, took support near the 15,750 level and headed towards 15,820 after an early consolidation. It continued to form higher highs and lows since the last two sessions and closed with a gain of around 120 points. The index formed a bullish candle on the daily scale with a long lower shadow, indicating that every decline got bought into. The index has been moving between 15,632 and 15,915 levels since last 15 sessions and needs a decisive range breakout to commence the next leg of rally. Now, it has to hold above 15,800 level to witness a bounce towards 15,915 and 16,000 levels while on the downside support exists at 15,750 and 15,600 levels.

India VIX fell 2.83 per cent from 12.99 to 12.62 level. A decline in the VIX after the recent spurt has again provided stability to the market to commence the next move.

On the options front, maximum Put OI stood at 15,500 level followed by 15,000, while maximum Call OI was seen at 16,000 followed by 15,800 levels. There was Call unwinding at all immediate strike prices while minor Call writing was seen at 16,200 and minor Put writing at 15,800 and then 15,000. Options data suggested an immediate trading range between 15,600 and 16,000 levels.

Bank Nifty opened with a gap up and moved in the positive territory throughout the day. Select heavyweight banking stocks took the banking index to 35,727 level and it finally closed the day with a gain of around 470 points. The index formed a bullish candle on the daily scale and is forming higher highs and lows since the past two sessions. Now it has to hold above 35,500 level to move up towards 36,000 and 36,250 levels, while on the downside, support exists at 35,250 and 35,000 levels.

Nifty futures closed positive with a gain of 0.78 per cent at 15,833 level. Among specific stocks, the trade setup looked bullish in MRF, Indiabulls Housing Finance, Apollo Tyre, ABFRL,

, Grasim, HDFC, , Voltas, NTPC, Lupin, , Ashok Leylands and Indusind Bank but weak in Adani Ports, McDowell, Dabur, , Sun TV and TechM.

(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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