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F&O: Falling volatility, rising PCR show bullish bias for Nifty

The index has been consolidating between 10,550 and 10,770 levels from last eight sessions.

Jun 06, 2018, 04.32 PM IST
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The index has been consolidating between 10,550 and 10,770 levels from last eight sessions.
By Chandan Taparia

The Nifty50 index managed to hold above its 50-DEMA after the Tuesday’s support of 10,550 and headed towards the 10,700 level. It formed a bullish candle followed by a long lower shadow candle on the daily chart, which indicated that the bulls are ready to hold a grip on declines.

Now, it has to continue to hold above 10,650 to extend its move towards the next major hurdle at 10,765, while on downside, supports are seen at 10,620 and then 10,550 levels.

The index has been consolidating between 10,550 and 10,770 levels from last eight sessions and it now requires a decisive range breakout to start the fresh rally.

The index has marked multiple supports and resistances at every small upward or downward movement, so consolidation in the broader trading range could continue. Till it holds above 10,550, the overall buy-on-decline strategy could be adopted with the view to surpassing the recent swing high of 10,770 and then 10,888 levels.

On the options front, maximum Put open interest stood at 10,600, followed by 10,200 and 10,500 while maximum Call OI was at 11,000, followed by 10,800 and 10,700 levels. There was significant Put writing at 10,600 and 10,500 levels, while Call writing was seen at 10,800 and 10,900 levels. Options data suggested a broader trading range between 10,600 and 10,800 levels for the coming sessions.

India VIX fell 5.78 per cent to 12.55. Falling volatility with rising Put-Call Ratio suggests an overall bullish bias for the market.

Bank Nifty formed a Hammer candle followed by a long-legged Doji candle on the daily scale, which indicates that every decline is being bought into. The index managed to hold above its crucial rising trend line formed by connecting the swing lows of 24,753, 25,662, 25,668 and 26,069. Now it has to hold above 26,250 to witness an upward move towards 26,500 and then 26,600 levels, while on the downside, the immediate support is seen at 26,100 and then 25,950 levels on an immediate basis.

Nifty futures closed with a 0.88 per cent gain at 10,690. Long buildup was seen in ZEEL, RCom, Arvind, NIIT Tech, Marico, Bajaj Finance, Jubilant Foodworks, Amara Raja Battery and Hexaware while shorts were seen in NCC, Just Dial, Pidilite Industries and STAR.

(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)
(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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