F&O: Call writers get trapped as Nifty tops 17K; Bank Nifty loses momentum

Nifty on Tuesday opened positive and witnessed sustained buying interest throughout the day as it headed towards a new lifetime high of 17,153 level. The index surpassed the psychologically important 17,000 mark and extended its move to close the day with a decent gain of more than 200 points. It formed a bullish candle and continued its winning streak for the seventh consecutive session. Now it has to hold above the 17,000 level to extend the move towards 17,250 and 17,500 levels while on the downside supports were seen at 16,950 and 16,750 levels.

India VIX moved up 9.01 per cent from 13.31 to 14.52 levels. Volatility spiked as Call writers got trapped and Nifty moved up sharply to surpass a key Call writing strike of 17,000. VIX needs to coold down to get more buying interest in broader market.

On the options front, maximum Put Open lis at 16,600 followed by 16,000 strike while maximum Call OI was at 17,000 followed by 16,500 strike. Minor Call writing was seen aot 17,500 and then 17,600 levels, while there was Put writing at 17,000 then 16,900 strike. Options data suggests a broader trading range between 16,500 and 17,500 zones while an immediate trading range in between 16,850 and 17,300 zones.

Bank Nifty opened positive and headed towards 36,550 level, but failed to continue its momentum. It remained lacklustre compared with Nifty index and closed with marginal gains of around 75 points. It formed a small-bodied candle on the daily scale, but managed to hold the 36,250 level. Now it has to hold above 36,250 level to witness a bounce towards 36, 750 and 37,000 levels, while on the downside, supports are seen at 36,000 and then 35,700 levels.

Nifty futures closed positive with gains of 1.11 per cent at 17,130 level. Among specific stocks the trade setup looked bullish in Bharti Airtel, SRF, Bajaj Finance, Interglobe Aviation, Hindalco, Apollo Hospital, Adani Enterprises, Marico, Bajaj Finserv, IOC, Asian Paint, Lalpath Labs, TCS, Jubilant FoodWorks, Titan and Ultra Cement but weak in AU Bank, BHEL, Indiabulls Housing Finance, Nestle India, IndusInd Bank and Sun TV.

(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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