Nifty: F&O: bitter bulls and bears; Sharp drop in VIX strengthens bulls

Nifty opened positively above the 17,800 level on Thursday, but subsequently became consolidated and remained within a 90 point range. The index adhered to its immediate support levels but did not break above its high from the previous day. It formed a small candle and inner bar on a daily scale, which indicated a tug-of-war between bulls and bears. Now it needs to hold above the 17,777 level to continue rising towards the 17,900 and 17,947 levels while on the downside support is at the 17,650 and 17,580 levels.

India VIX fell 6.78 percent from 17.33 to 16.15. A drop in volatility again triggered support-based buying in the broader market. VIX must now cool below the 15-14 zone to continue the successful market performance.

In options data, the maximum interest in the Put Open was observed at the 17,000 level followed by 17,500, while the maximum Call OI was 18,000 followed by 17,800 levels. Minor call writing was observed at 17,800 then 17,900 levels, while there was an option entry at 17,800 then 18,500 levels and an outcome at 17,300. Wider trading range between 17,400 and 18,200 levels, while the immediate trading range is between 17,600 and 18,000 levels.

Bank Nifty opened positively, but moved in a consolidated fashion throughout the day. It remained muted despite the uptrend seen in the broader market. The index formed a bearish candle on the daily scale as it closed below the opening mark, but eventually closed with a gain of around 230 points and continued to form higher lows for a fourth session. Now the index needs to hold above the 37,700 level to see a rebound to the 38,100 and 38,300 levels, while on the downside, major support has been seen at the 37,500 and 37,300 levels.

Smart Futures closed positively with a gain of 1.09% to the 17,820 level. Among specific stocks, the trade setup appeared bullish in Tata Motors, Titan, Godrej Properties, ABFRL, Bata India, Trent, Indian Hotels Company, MCX, IRCTC, Voltas, Escorts, Maruti, UBL, DLF, Mcdowell, IEX, Pidilite Industries and PVR but weak in Gail, Dr Reddy, Coal India, HDFC, Nestlé, Grasim and ZEEL.

(Chandan Taparia is a Technical and Derivatives Analyst at MOFSL. Investors are advised to consult financial advisers before making an investment call based on these observations)

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