F&O: Options shift Nifty trading band to 10,400-10,630 range

By Chandan TapariaThe Nifty50 index opened with a gap down and remained highly volatile throughout Wednesday. It fell towards the 10,460 level, but recovered from the lows and formed a Doji candle on the daily chart.The formation of a Doji candle after the decline of last session indicates that both the bulls and bears are fighting hard to get a grip on the market. Now, the Nifty50 has to cross and hold above 10,550 to witness a bounceback towards its major hurdle at 10,620 while holding below 10,500 could extend its decline towards the next support at 10,430, and then 10,400 levels.On the options front, maximum Put open interest stood at 10,400 followed by 10,300, while maximum Call open interest was at 10,700 followed by 11,000. Fresh Call writing was seen at strike price 10,900 followed by 10,500 while fresh Put writing was seen at 10,300 followed by 10,400. The option band signified a trading range between 10,400 and 10,630 marks. India VIX slipped 0.83 per cent to 13.80.Bank Nifty opened with a gap down by more than 250 points and continued its weakness for the second consecutive session. It recovered partially from the day’s low but, the bears put pressure at higher levels.The index formed a long-legged Doji on the daily chart, which implies indecision in the market. It also formed an Island Reversal pattern on the daily chart, which suggests that bears are in a powerful position to drag the market to lower levels.Overall, candle patterns indicate limited upside and volatile swings in the coming days. As long as the Nifty50 holds below 25,350, further weakness can drag it towards 24,750, while on the upside, hurdles are seen at 25,500 and then 25,750 levels.Nifty futures closed with a loss of 0.42 per cent at 10,520. Long buildup was seen in Bharti Infratel, Apollo Tyres, Bharat Forge, IDBI, MRF, Ashok Leyland, Mindtree and Granules, while shorts were seen in Cummins India, Petronet LNG, Bank of India, Godrej Consumers, M&M Finance, BHEL, Grasim and Colgate Palmolive..(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)

from The Economic Times http://ift.tt/2F8GWwa