F&O: Call writers exit shorts at 12,000; India VIX declines 2.20%

Nifty on Tuesday managed to hold Monday’s low and gradually extended its gains towards the 11,960 mark. On daily chart, the index formed a small green-bodied candle with a lower shadow, as we saw buying interest from lower levels.

However, it continued to move in a broader trading band between 11,785 and 12,034 level since past 14 sessions and requires a decisive range breakout on either side to commence the next leg of rally. Till the time Nifty holds above 11,850 level, we maintain a positive stance on the market for an upward movement towards the 12,000 -12,050 zone. On the flipside, support remains intact at 11,850 and then 11,780 levels.

On the monthly options front, maximum Put open interest was at 11,800 followed by 11,900 levels, while maximum Call OI was at 12,000 followed by 12,200. Some Put writing was seen at 11,900 and 11,800 levels while Call writers exited some of their short positions at 12,000. Options data suggested a broader trading range between 11,800 and 12,200 levels.

India VIX fell 2.20 per cent to 15.41 level. It needs to hold below 15 level to surpass the recent highs.

Bank Nifty opened on a flat note and managed to hold above previous day’s low. It continued to make higher highs as the day progressed and eventually concluded the session a tad above the 31,200 mark. The banking index continued to outperform the benchmark indices and formed a green-body candle on the daily scale.

Bank Nifty sustained above its crucial hurdle at 31,200 mark; and thus we may see continuation of the ongoing optimism towards 31,500 and then 31,800 levels; while 30,800 and 30,400 levels remain key supports for the index.

Nifty futures closed positive at 11,985 level with a gain of 0.54 per cent. There was long buildup in Tata Elxsi, Bharti Infratel, Canara Bank, Bharti Airtel and Castrol while shorts were seen in CESC , ZEEL, Hero Moto, Muthoot Finance and Torrent Pharma.

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