F&O: Bulls and bears in a tug of war; followup buying missing

NSE Nifty opened gapup on Tuesday and headed towards the 12,172 level in initial trades. However, the index failed to hold on to 12,150, and witnessed a profit booking-fuelled decline of 50 points from higher levels.

The headline index formed a Doji candle with a long upper shadow on the daily scale, which indicates a tug of war between the bulls and bears, as well as absence of followup buying at higher zones.

Nifty has been consolidating between 12,000 and 12,172 levels from the last four trading sessions, where declines were being bought into, but supply pressure was intact at higher levels. Now, the index has to continue to hold above 12,050 to witness an upmove towards 12,172 and then 12,222, while on the downside, major support was seen at 12,000 and then 11,950.

On the options front, maximum Put open interest stood at 12,000 followed by 11,500 strike, while maximum Call OI was at 12,500 followed by 12,200 strike. Put writing was seen at 12,000 and then 11,800 strike, while Call writing stood at 12,400, with minor Call unwinding at immediate strike. Options data indicates a wider trading range between 11,800 and 12,300.

India VIX fell 2.32 per cent to 13.88 level.

Bank Nifty opened positive, but failed to hold above its immediate hurdle of 31,500 and remained consolidative for the latter part of the session. It has again reclaimed its 50-DEMA and has been consolidating between 30,900 and 31,500 zones from the last four sessions. Now, the index has to continue to hold above 31,000 to witness an upmove towards 31,500 and then 31,750, while on the downside, support exists in 30,900–30,800.

Nifty futures gained 0.74 per cent to 12,129. Long Builtup was seen in Balkrishna Industries, Sun TV, Divis Labs, Glenmark and JSW Steel, while Nalco, NCC, Petronet LNG, MRF and Godrej Consumer Products witnessed formation of short positions.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)