F&O: VIX sees a spike; trading range widens to 11,500-12,000

By Chandan Taparia

Nifty opened flat on Monday, but failed to hold its opening level and drifted towards the 11,700 level in line with weak global cues. The index witnessed a drop of more than 200 points from higher levels and closed the day with a loss of around 160 points.

However, the index witnessed a small recovery of around 50 points from lower levels and in the process ended up forming a Bearish Belt Hold kind of candle, which indicated that the bears are having complete dominance on the market for most part of the session.


Techanical indicator RSI has seen a decisive negative crossover on the daily scale, which doesn’t bode well for the bulls to get the stability. As long as it doesn’t surpass the immediate hurdle at 11,850 level, more weakness can seep in and take the index towards the next key support at 11,666 level, while on the upside, resistance levels are shifting lower to 11,950 from 12,020 levels.

India VIX moved up 4.6 per cent from 21.82 to 22.83 levels. Volatility needs to cool down below 20 level for the market to stabilise and keep a check on any spike on account of the US election.

On the options front, maximum Put open interest was seen at 10,500, followed by 11,000 level, while maximum Call OI stood at 12,500 level followed by 12,000 level. Call writing was seen at 11,900 and then 12,000 levels, while there was Put writing at 11,700 and then 11,400 levels. Options data suggested a wider trading range between 11,500 and 12,000 levels.

Bank Nifty failed to hold the 24,500 level and drifted towards the 23,850 mark during the day. The index ended the day on a negative note with a loss of 400 points and remained negative for the third consecutive session. The index formed a bearish candle on the daily scale and negated the formation of higher lows after six consecutive sessions. Now as long as the index remains below 24,500 level, weakness could be seen towards the next support at 23,750 and then 23,500 levels, while the key hurdles on the upside exist at 24,750 level.

Nifty futures closed negative at 11,779 level with a loss of 1.30 per cent. The trade setup looked positive in Nestle India, Kotak Bank, PowerGrid, HUL and HDFC but was weak in Hero MotoCorp, Bajaj Auto, Hindalco, ZEEL, PVR, UPL, TVS Motor, RIL, Lupin and Sun TV.

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