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F&O: Bear dominance on, but support-based buying lifts market

On the options front, Maximum Put open interest was at 11,000 followed by 10,500 levels.

Aug 06, 2019, 05.00 PM IST
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By Chandan Taparia

Nifty50 managed to hold Monday’s low and the immediate support at the 10,800 level, and then extended its gains towards the 11,020 level. The index respected the 10,800 level, which is 61.8% retracement of the entire upward move from 10,004 to 12,103 levels. The index formed a Bullish Engulfing Pattern followed by a Hammer candle on the daily scale, as support-based buying interest emerged at lower levels, triggering a bounce.

The index is set to negate the formation of lower top and bottom as it is turning from the deep oversold territory with the RSI below 30. Now, the index has to hold 10,950 to extend its bounce towards 11,111 and then 11,150 levels, while on the downside major supports are seen at 10,800 and 10,780 levels.

On the options front, Maximum Put open interest was at 11,000 followed by 10,500 levels, while maximum Call OI was at 11,000 followed by 11,500 levels. There was Call writing at 11,200 followed by 11,400 while Put writing was seen at 10,700. Option data suggested a trading range between 10,700 and 11,200 levels.

India VIX fell 2.77 per cent to 16.12 level. Higher volatility suggests a bear dominance and pessimism in the market.

Bank Nifty finally negated the formation of lower highs and lows after five sessions and formed a Bullish Engulfing pattern on the daily scale. Now, it has to hold above 28,000 and will need followup buying to witness a bounce towards 28,250 and then 28,550 level, while on the downside, supports are seen 27,500 and then 27,350 levels. The rate-sensitive index is turning from deep oversold territory and requires followup hold to see short-term stability. However, volatile swings cannot be ruled out ahead of RBI’s money policy.

Nifty futures closed positive with a gain of 0.61% at 10,963. Long buildup was seen in SRF, Berger Paints, Torrent Power and MFSL while shorts were seen in Cipla, Arvind, LIC Housing Finance and ZEEL.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of
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