F&O: Futures signal negativity, but bulls have a grip on market
Nifty formed a 'Spinning Top', which indicates that the pace of buying was slowing down.
The Nifty50 index continued to form higher highs and higher lows for last nine sessions and made a new lifetime high of 11,390. However, it witnessed profit booking at higher levels and finally closed in the negative after logging gain for four consecutive sessions.
The index formed a Spinning Top candle on the daily scale, which indicates that the pace of buying is slowing down. Now, the index has to continue to hold above 11,300 to extend its move towards the 11,400-11,435 zone, while on the downside, major support is seen at 11,250 and then 11,171 levels.
On the options front, maximum Put open interest was at 11,000, followed by 11,200, while maximum Call OI was at 11,500 followed by 11,400. There was Put writing at 11,000 and 11,200 levels, whereas Call writing was seen at strike price 11,400 followed by 11,500.
India VIX moved up 0.40 per cent to 12.53. Overall lower volatility suggests the bulls are holding a grip on the market.
Bank Nifty failed to surpass the previous day’s high and corrected towards 27,477 level. It has negated the formation of higher lows of last six sessions after the announcement of RBI policy and has been underperforming the Nifty in last couple of sessions.
Now it has to cross and hold above 27,650 to extend its move towards 27,800 and then 28,000 levels, while holding below 27,500 could drag it towards 27,400 and then 27,250-27,165 zone.
Nifty futures closed in the negative with a loss of 0.18 per cent at 11,351. Long buildup was seen in KPIT, Marico, NIIT Tech, Coal India, UBL, Bata India, IDBI and Petronet while shorts were seen in Exide Industries, Tata Global, Apollo Tyre, Castrol India, Reliance Infra, Eicher Motor and Hindalco.
(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)