F&O: Options show Nifty50 may see profit taking, test downside support

By Chandan Taparia

The Nifty50 index opened in the negative and witnessed selling pressure for most part of the session on Thursday. It finally negated the formation of higher highs and higher lows after nine consecutive sessions and drifted towards the 11,235 level.

The index formed a Bearish Marubozu Candle and a pattern similar to the Evening Star Pattern on the daily scale, which imply that some profit booking or retest of downside support could be seen in the market in the days ahead. If it sustains below 11,300, then a decline towards 11,171 level could be seen, while resistances are shifting to 11,330 and 11,390 levels.


On the options front, maximum Put open interest was at 11,000 followed by 11,200 while maximum Call OI was at 11,500 followed by 11,400. There was Call writing at 11,500 followed by 11,300 while Put unwinding was seen all immediate strike prices .

India VIX moved up 0.20 per cent to 12.55. Overall, lower volatility suggests that the bulls are likely to hold the market near major support zones on declines.

Bank Nifty continued to be under pressure and formed a Bearish Candle on the daily scale. It has been forming lower highs and lower lows since last two sessions. If it sustains below 27,650, then it can retest major support towards the 27,165 mark.

Nifty futures closed in negative with a loss of 0.86 per cent at 11,276. There was long buildup in Sun TV, IGL, Divi’s Lab, Jet Airways, Ashok Leyland, Voltas and GAIL, while shorts were seen in Marico, Torrent Power, UBL, DCB, Arvind, Maruti, Kotak Bank and Motherson Sumi.

(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)