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F&O: Nifty forms lower high-low for third session in bearish signal

Nifty opened positive on Friday but failed to surpass a key hurdle at 14,750 level and cascaded throughout the day. Finally, the index witnessed some recovery from lower levels and managed to close on flat note below the 14,700 mark.

Nifty formed a Bearish Belt Hold candle and started forming lower highs and lows since last three sessions. Now, it has to cross and hold above 14,750 level to witness some stability and then bounce towards 14,900 and 15,000 levels. On the downside, support exists at 14,600 and 14,500 levels.

India VIX moved up 0.93% from 20.08 to 20.26 level. India VIX needs to hold below 20 level to again attract a bullish stance in the market.

On the options front, maximum Put Open Interest stood at 14,000 level followed by 13,500, while maximum Call OI was seen at 15,000 level followed by 14,800. There was Call writing at strike prices 15,100 and 15,300, while Put writing was seen at 14,650 and 14,500 levels. Options data suggested a wider trading range between 14,400 and 15,000 levels.

Bank Nifty opened flat and traded with a negative to rangebound bias for most part of the session. Banking stocks have been facing weakness and pulled the index to test the 32,115 level before it concluded the day with a loss of around 280 points. It formed a bearish candle and has made lower tops and bottoms in the last three sessions. Now, it has to cross and hold above 32,500 level to witness a bounce towards 33,000 and 33,333 levels, while on the downside support exists at 32,000 and 31,750 levels.

Nifty futures closed flat to positive with 0.05% gain at 14,717 level. Among specific stocks, the trade setup looked bullish in Asian Paint, UPL, ITC,

, Berger Paint, Colgate Palmolive, L&T, ICICI Pru Life, Marico, Powergrid and McDowell but weak in Jindal Steel, DLF, GAIL, Concor, Nalco, PEL, MGL, IndusInd Bank, , L&T Finance, M&M, Havells and MRF.

(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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