F&O: Mixed signals all over, don’t buy till strong buy signal emerges

By Chandan Taparia

Nifty started the session with a downside gap; but rebounded piercingly in the first 5 minutes of trade. Then, it moved in sideways direction throughout the day and formed a green-body candle on the daily chart.

After a massive fall of last three sessions, the index took a pause and formed an Inside Bar pattern on the daily scale. Despite a flat closing of the benchmark indices, the market breadth remained in favour of the declining counters.


Though the RSI oscillator is moving in the oversold territory, yet there is no sign of an imminent trend reversal seen on the charts. Thus, traders are advised to avoid bottom fishing till we don’t see any major sign of reversal.

At the current juncture, the immediate support is placed at 10,333 and then 10,200 levels; while major resistance remains intact at 10,650 and then 10,751 levels.

On the options front, maximum Call open interest is at 12,000 and then 11,500, while maximum Put open interest is at 10,000 and then 10,500. There was Call writing at 10,900 and then 10,700 while Put writing was seen at 10,000 then 10,200. Options data indicated a shift in lower trading range between 10,200 and 10,800 levels.

India VIX moved up 2.55 per cent to 31.58 level. It is sustaining above the horizontal trend line on the daily scale and, thus, volatile swings may continue in the coming days.

Bank Nifty moved within Monday’s trading range and formed an Inside Bar pattern on the daily chart. After the mayhem of past three sessions, the bulls finally found a shelter as the banking index ended with marginal gains.

However, it continues to sustain below its major support at the 100 EMA and the rising trend line on the weekly chart, which is a negative sign for the market. At its current juncture, there is no sign of trend reversal on the chart and, thus, traders should refrain from buying until we see strong buying signal on the chart.

Going forward, Nifty’s support is placed at 25,923 and 25,500 levels; while resistance can be seen at 27,100 and then 27,800 levels.

Nifty futures closed negative with at 10,451 level with a marginal loss of 0.11 per cent. There was long buildup in Bharti Infratel, Pidilite Industries, Hero MotoCorp, Sun TV and Naukri; while shorts were seen in GAIL, Tata Steel, Oil India, Chola Finance and IndusInd 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)