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F&O: Trend remains positive for Nifty, but consolidation overdue

The index has rallied by more than 1,100 points in just six sessions.

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Last Updated: Jun 03, 2020, 05.05 PM IST
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As of now, the trend remains positive as long as it holds the immediate support at 9,889 level, while hurdles are seen in the 10,200-10,300 zone.
By Chandan Taparia

Nifty opened Wednesday’s session with a gap up and continued its momentum towards the 10,176 level by surpassing May 13 high of 10,159. It has been moving upward for last six consecutive sessions and is making higher highs and lows on the daily scale. The index ended the session with some 80 points gain, but formed a bearish candle on the daily scale, as it closed below its opening mark. The index has rallied by more than 1,100 points in just six sessions. So it may now see a consolidative move before starting the next leg of rally.

As of now, the trend remains positive as long as it holds the immediate support at 9,889 level, while hurdles are seen in the 10,200-10,300 zone. Traders are advised to keep the position light with a trailing stop loss as a drift below the 9,889 level may cause it pause the recent rally.

In monthly options, maximum Put open interest stood at 9,000 followed by 9,500 levels, while maximum Call OI was at 10,000 followed by 10,500 levels. Marginal Call writing was seen at 11,000 followed by 10,800 levels, while there was Put writing at 9,600 followed by 10,000 levels. Options data suggested a wider trading range between 9,700 and 10,300 levels.

India VIX remained flattish and fell marginally by 0.26 per cent to 30.04 level. The volatility index is hovering around its support of 30 and a lower VIX is supporting the higher market base.

Bank Nifty continued its winning streak for the seventh consecutive session as it rallied towards the 21,600 mark. However, it corrected sharply by more than 700 points from higher levels in the last hour of trade but managed to close with around 2% gains. The index formed a bearish candle, which is similar to a Shooting Star pattern as it closed slightly below the opening zone with a long upper shadow. Bank Nifty failed in its attempt to scale the previous swing high of 21,967, but is still forming higher highs and lows on the daily scale. Now the rate-sensitive index might see some consolidation with immediate support at 20,500 and then 20,000 levels while hurdles are seen at 21,600 and then 22,000 levels.

Nifty futures closed positive at 10,085 level with 1.23% gains. There was long buildup in IndiGo, RBL Bank, MGL, Kotak Bank, Bosch and ICICI Bank while shorts were seen in MFSL, Torrent Pharma, UBL, NTPC and Divi’s Labs.

(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 www.economictimes.com.)
(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

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