F&O: Doji on Nifty charts, rising VIX signal market’s bearish bias

F&O: Doji on Nifty charts, rising VIX signal market’s bearish bias

Nifty opened flattish on Friday but failed to hold above 14,600 level and drifted sharply towards 14,350 zone. It cascaded more than 250 points and closed the session deep in the red with around 1.5 per cent loss. Nifty formed a bearish candle on the daily scale and a Doji with a long upper shadow on the weekly scale, which indicated that selling pressure is seen at higher levels.

Nifty may continue to remain highly volatile ahead of monthly expiry and the Union Budget. As long as it remains below 14,500 level, weakness could be seen towards 14,250 level, while on the upside, key hurdle exists at 14,600 and 14,750 levels.

India VIX moved up 1.09 per cent from 22.18 to 22.42 levels. Volatility needs to cool down below 20 level to commence the fresh leg of rally for a new lifetime high. However, volatility could be comparatively higher ahead of Budget 2021.

On the options front, maximum Put Open Interest stood at 14,000 level followed by 13,500, while maximum Call OI is at 15,000 followed by 14,500 levels. There was Call writing at strike prices 14,500 and 14,700, while there was Put writing at 13,800 and 14,000 levels. Options data suggested a wider trading range between 14,000 and 14,800 levels, while an immediate trading range between 14,200 and 14,600 levels.

Bank Nifty opened with a gap down and witnessed sustained selling pressure throughout the day with underperformance by all banking counters. The rate-sensitive index plunged by more than 1,000 points and touched an intraday low of 31,119 level. It formed a bearish candle on the daily scale, followed by a Bearish Engulfing Candle on the daily and weekly scales. As long as it remains below 31,750 level, the bounce could be sold for a downside move towards 30,500 level, while on the upside, hurdles are seen at 32,000 and 32,200 levels.

Nifty futures closed negative with the loss of 1.53 per cent at 14,375 level. The trade setup looked positive in Bajaj Auto, Apollo Tyre, Hero MotoCorp, Bharat Forge, HUL, Eicher Motor and TCS but weak in SAIL, RBL Bank, SRF, JSW Steel, PEL, L&T Finance, Axis Bank, M&M Financial, Hindalco, IndusInd Bank, SBI, PNB, Coal India, ONGC and Kotak Bank.

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