The index saw a breakout on the weekly time frame chart at the beginning of the week and continued to form higher highs since the last five weeks. Now it has to hold above 17,250 level to extend the move towards 17, 500 and 17,777 levels, while on the downside support was seen at 17,200 and 17,050 levels.
India VIX moved up 2.12 per cent from 14.24 to 14.54 level. Stability in volatility and declines from higher levels suggest the bulls are holding a tight grip over the market.
On the options front, maximum Put Open Interest was seen at 16,500 level followed by 17,000 while maximum Call OI was seen at 17,500 followed by 17,000 levels. There was Call writing at 17,300 and then 17,800 levels, while Put writing was seen at 17,300 and then 17,000 levels. Options data suggested a broader trading range between 16,750 and 17,800 levels, while the immediate trading range was seen between 17,100 and 17,500 levels.
Bank Nifty opened positive and headed towards the 37,140 level in the initial tick. However slight consolidation was seen in the second half of the session and the index closed with a loss of around 70 points. It formed a High Wave candle on the daily scale with long shadows on both sides even as it made a strong bullish candle on the weekly scale.
The overall price setup suggests a tug of war, but the major trend remains intact to bullish. Now it has to hold above 36,800 level to witness a bounce towards 37,250 and 37,500 levels, while on the downside support was seen at 36,500 and then 36,250 levels.
Nifty futures closed positive with a gain of 0.49 per cent at 17,331 level. Among specific stocks, the trade setup looked bullish in LTTS, National Aluminium, BEL, Reliance, , Jindal Steel, Coal India, MCX, Havells, Motor, BPCL, , HDFC AMC, Coforge, SRF, LTI, Ambuja Cement, Indigo and Asian Paint but weak in Cipla, Alkem, Manappuram, Ashok Leyland and Gujarat Gas.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)