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F&O: PCR suggests market in tight grip of bulls & Put options writers

The index continued the formation of higher lows for the sixth consecutive session.

ET CONTRIBUTORS|
Updated: Jul 10, 2017, 04.56 PM IST
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Long buildup was seen on the counters of Canara Bank, Bharti Airtel, Oriental Bank, Hexaware, IndusInd Bank, Divi’s Lab, TCS and Hindalco.
Long buildup was seen on the counters of Canara Bank, Bharti Airtel, Oriental Bank, Hexaware, IndusInd Bank, Divi’s Lab, TCS and Hindalco.
By Chandan Taparia

The Nifty50 surpassed its previous lifetime high of 9,709 and registered a new record high of 9,782 on Monday. It formed a strong Bullish Candle on the daily chart and saw the breakout from its right angle triangle pattern.

The index closed with decent gains of more than 100 points, even after a technical snag halted trading on the NSE platform for over three hours. Now, it has to continue to hold above 9,700 to extend this upward move towards the 9,850 level and higher, while on the downside, supports exist at 9,650 level.

The index continued the formation of higher lows for the sixth consecutive session. Till this formation is not negated, the market is likely to cherish the bullish sentiment.

On the options front, maximum Put open interest got shifted to strike price 9,600 followed by 9,500 while maximum Call OI shifted to 9,800 followed by 9,700. Significant Put writing was seen at strike prices 9,700 and 9,600, which supported the breakout and signalled a possible extension of this upward move.

Call unwinding was noticed at strike prices 9,500, 9,600 and 9,700 while fresh Call writing took place at strike prices 9,800, 9,850 and 9,900. The Put-Call Ratio based on Open Interest of Nifty moved higher to suggest that the bulls and Put options writers have kept a tight grip on the market.

The India VIX moved up marginally by 0.39 per cent to 10.91 and lower volatility at new high levels suggested a risk-off scenario in the market.

Bank Nifty gained around 1 per cent on a closing basis. However, it made a fresh freak high in the afternoon session to hit 23,964. It has to continue to hold above 23,500 to retest it earlier high of 23,897 and recent swing high of 23,964.

Long buildup was seen on the counters of Canara Bank, Bharti Airtel, Oriental Bank, Hexaware, IndusInd Bank, Divi’s Lab, TCS, Hindalco, IDEA, Wipro, PNB, while only shorts were seen in Shriram Transport Finance, IDFC, Biocon, M&M and Federal Bank.

(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 www.economictimes.com.)
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