F&O: Nifty may weaken towards 14,200; VIX needs to cool down below 20

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F&O: Nifty may weaken towards 14,200; VIX needs to cool down below 20


Headline equity index Nifty opened positive on Monday, but failed to even hold its opening zone and moved southwards amid weak global cues. The index traded in the red for the second consecutive session and fell towards 14,200 with a cut of around 150 points. As the index saw selling pressure across the board after a sharp rally, traders are now advised to trade accordingly for a small profit booking decline. Nifty formed a bearish candle on the daily scale and is forming lower tops and lower bottoms for the last two sessions. Nifty may weaken towards 14,200 and 14,000 zones, while hurdles are seen at 14,450 and 14,500 levels.

Volatility index India VIX went up by 1.6 per cent to 24.39. Volatility has spiked above 24 which is causing a pause in the positive momentum and needs to cool down below 20.

On the options front, maximum Put OI stood at 14,000 and 13,000, while maximum Call OI stood at 15,000 and 14,500. Call writing was seen at 14,500 and 14400 strike, while Put writing was seen at 14,100 and unwinding at 13,800 strike. Options data suggested a wider trading range in between 13,800 and 14,600 zones, while an immediate trading range was between 14,100 and 14500 levels.

Bank Nifty opened flattish but could not surpass its hurdle at 32,500, even after HDFC Bank’s positive move, and drifted towards 31,650 level. It moved hand in hand with the broader market as all banking stocks traded in the red, barring HDFC Bank. It closed the day with losses of more than 400 points. Bank Nifty formed a bearish candle on the daily scale and continued to form lower tops – lower bottoms for the second straight session on Monday. Now, till it remains below 32,000 zone, weakness could be seen towards 31,500 and 31,250 zones, while on the upside hurdle exists at 32,200 and 32,500 zones.

Nifty futures closed negative with a loss of 1.43 per cent at 14,251. Positive trade setup was seen in UPL, PVR, Reliance, Eicher Motor, Titan, Jubilant Foodworks and HDFC Bank, while the structures looked weak in Indiabulls Housing Finance, M&M Finance, Petronet LNG, Tata Steel, ONGC, NMDC, LIC Housing Finance, MGL, Manappuram, JSW Steel, Hindalco, Escorts, IndusInd Bank, Bajaj Finance, Glenmark, Dr Reddy’s and Cadila.

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





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