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    F&O: VIX continues to send out bullish signals, but Nifty forms bearish candle

    Synopsis

    Options data suggested a trading range between 10,400 and 10,800 levels.

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    The index continued to form higher lows on the weekly scale as well, while supports gradually shifted higher, which suggests an overall bullish stance.
    By Chandan Taparia

    Nifty opened positive on Friday and continued to form higher highs and lows for the fourth consecutive session. It remained consolidative for most of the session and traded in a range of 70 points between 10,562 and 10,631 levels. Finally, the index closed the last session of the week with a gain of around half a per cent, but formed a small body bearish candle, as it closed below its opening level.

    The index continued to form higher lows on the weekly scale as well, while supports gradually shifted higher, which suggests an overall bullish stance. Now, the index has to hold above 10,500 level to extend its move towards 10,800 level, while on the downside, support is seen at 10,450 and then 10,333 levels.

    India VIX fell 2.80 per cent from 26.51 to 25.76 levels. A gradual decline in volatility, which is falling since last three consecutive weeks, and is at lowest level in four months, suggests an overall bullish stance. A lower VIX with an overall rising Put-Call ratio suggests the emergence of multiple supports, leading to buy on any intraday decline strategies in the market.

    On the options front, maximum Put open interest was at 10,000 followed by 9,000 levels, while maximum Call OI was at 11,500 followed by 11,000 levels. Call writing was seen at 10,800 and then 11,200 levels while there was Put writing at 10,400 and then 10,200 levels. Options data suggested a trading range between 10,400 and 10,800 levels.

    Bank Nifty continued its underperformance for the second consecutive session and closed the day on a negative note by half a per cent. It formed a bearish candle on the daily scale, while an Inside Bar formation on the weekly scale indicated a tug of war between the bulls and bears near the key hurdle in the 22,300-22,500 zone. Now the index needs to hold above 21,500 level to witness an up-move towards the recent swing high of 22,300 and 22,500 levels, while on the downside, supports are seen at 21,250 and then 21,000 levels.

    Nifty futures closed positive at 10,568 level with a gain of 0.27 per cent. Positive setups were seen in stocks like BEL, Siemens, Bharat Forge, Bharti Airtel, Eicher Motor, MFSL, Muthoot Finance, TVS Motor, Godrej Consumers, Hero MotoCorp, Escorts and Bajaj Auto while the structures were weak in RBL Bank, IndusInd Bank, Hindalco and McDowell

    (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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