F&O: Multiple signals suggest pause in stocks rally; easing VIX only solace

By Chandan Taparia

Nifty opened negative and traded lower on Thursday, as it could not surpass the immediate hurdle at 12,750 level. It remained consolidative in a 100-point range for most part of the session and closed the day 55 points lower. The index formed a small Doji with an Inside Bar, which is a Harami Cross pattern on the daily scale indicating a pause in the positive momentum if there is any followup selling.

The index negated the formation of higher high the last seven sessions, but hasn’t breached the previous day’s low, which has kept the bullish bias intact. Now, it has to hold above 12,550 level to witness a bounce towards 12,800 and 12,900 levels, while major support on the downside exists at 12,430 level.


India VIX slipped 6.40 per cent from 22.03 to 20.62 levels. Volatility has to cool down further below the 20-19 zone to continue the momentum with a higher market base.

On the options front, maximum Put open interest stood at 12,000 level followed by 11,000, while maximum Call OI was at 13,000 followed by 13,500 levels. There was Call writing at strike prices 13,500 and 13,000 while Put writing was seen at 12,500 and then 12,000 levels. Options data suggested a wider trading range between 12,400 and 13,000 levels.

Bank Nifty opened negative and remained volatile through the day and every bounceback witnessed selling pressure. The banking stocks saw some decline and closed the session around 2% down. It formed a Small Bearish Candle on the daily scale and negated the formation of higher highs and lows of last eight sessions. Now, the index has to find support near the 27,900 level to witness a bounce towards 29,000 level.

Nifty futures closed negative at 12,704 level with a 0.40% loss. The trade setup looked positive in Indiabulls Housing, Balkrishna Industries, Aurobindo Pharma, HUL, Grasim, Escorts, Tata Chemicals, Siemens, REC, ITC, Biocon and L&T but weak in Bank of Baroda, Canara Bank and Max Financials.

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