F&O: Nifty shows strength but needs follow-up buying

By Chandan Taparia

The Nifty50 index witnessed support-based buying after the decline of last three sessions, as it managed to hold above 11,500 and headed towards 11,562 level.

The index formed a Hammer candle on the daily scale for the second consecutive session, which indicated support-base buying at lower levels. It managed to take a pause from its immediate selling pressure, but requires follow-up buying interest above 11,550 to witness an upward move towards 11,620 and then 11,666 level, while on the downside, supports are seen at 11,450 and then 11,420 levels.


On the options front, maximum Put open interest was at 11,400 followed by 11,500 while maximum Call OI was at 11,800 and then 11,600 and 12,000. There was marginal Call writing at 11,700 followed by 11,650 levels, whereas Put writing was seen at 11,500 followed by 11,400.

India VIX moved up 0.51 per cent to 13.72. A pause in VIX after a sharp rise of 10 per cent indicated some consolidation at support zones.

Bank Nifty remained highly volatile throughout the session, but finally negated the formation of lower highs and lower lows on the daily scale. It formed a High Wave Doji candle, which indicated a tug of war after the recent decline of 1,250 points from its top of 28,388. Now, it has to hold above 27,440 to witness a bounce towards 27,700-27,750 zone, while on the downside support was seen at 27,250 and then 27,165 levels.

Nifty futures closed in the positive at 11,546 with a gain of 0.25 per cent. Long buildup was seen in Cummins India, Torrent Power, Torrent Pharma, Granules, Aurobindo Pharma, Balrampur Chini and Biocon while shorts were seen in Chola Finance, Nalco, Godrej Consumer, ZEEL, Andhra Bank, Shriram Transport Finance and Amara Raja.

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