F&O: Bulls & bears in a tug of war to make or break the 11,883 level

By Chandan Taparia

Nifty on Tuesday made an intraday lifetime high of 11,883 in the opening trade, but failed to hold on to the gains and drifted sharply towards the 11,680 level. The index formed a Dark Cloud Cover pattern on the daily scale, as it moved higher but closed near the middle part of the previous session.

The pattern set-up suggests that the bears are not allowing Nifty to stay at higher levels and supply pressure is seen at fresh lifetime high.


The Index closed with a loss of around 120 points, but still made higher lows for the five consecutive session.

Nifty needs to continue to hold above 11,666 to extend its move towards 11,888 while major support exists at 11,550.

The price set-up with higher volatility suggests that the bulls are in a tug of war with the bears to decisively surpass the new all-time high.

On the options front maximum Put open interest was at 11,000 followed by 10,500 strike while maximum Call open interest stood at 12,000 followed by 12,500 strike.

Marginal Call and Put writing activities were seen and options band signifies a wider trading range at 11,500 to 12,000 levels.

India VIX moved up by 8.33 per cent to the 25.65 level and recovered from previous day’s close of 23.65 levels. Volatility could continue for the next two sessions.

Nifty Bank made a new lifetime high of 30,926, but failed to hold onto the gains and drifted sharply towards the 30,250 zone. It formed a Dark Cloud Cover pattern on the daily scale, which has a bearish implication if follow-up happens. The index managed to surpass its previous lifetime high of 30,669, but drifted towards its immediate support zones. The index has to hold above 30,000 to attract buying interest towards 30,669, and then 30,926 while next major support shifts to 29,500.

Nifty futures fell 1.14 per cent to 11,724. Built-up of long position were seen in Just Dial, Bank of Baroda, PVR, DHFL, SRF and Reliance while Shorts were seen in Torrent Pharma, Tata Motors, Strides Pharma Science , BPCL, Infosys, Canara Bank.

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