F&O: Nifty setup still strong; lower volatility may support fresh buying

Nifty started Monday’s session with a marginal loss on the back of a gap-down opening in index heavyweight Reliance Industries. The index breached its sequence of making higher highs and lows of last seven sessions and concluded the day with marginal loss.

It remained in a narrow range for most part of the session and formed a small green body candle on the daily chart. The overall chart structure is strong. Till the time Nifty sustains above its support zone at 12,150 – 12,200, we maintain our positive stance on the market for an up-move till the 12,350 – 12,400 zone.

On the monthly options front, maximum Put open interest was at 12,200 followed by 12,000 level, while maximum Call OI was at 12,300 followed by 12,400 levels. There was Put writing at strike prices 12,250 and 12,150, while Call writing was seen at 12,300 followed by 12,350 level. Options data suggested a trading range between 12,150 and 12,350 levels over the next few sessions.

India VIX fell 2.94 per cent to 11.95 level. Lower volatility may continue to support the index to attract fresh buying interest.

Bank Nifty continued to make higher highs for the eighth consecutive session and concluded it with negligible loss over its previous close. The banking index formed a Doji candle on the daily scale, indicating indecisiveness among the market participants.

However, it is sustaining well above the consolidation breakout level on the weekly chart, which is a positive sign for the index. Going forward, strong support for the banking index remains intact at the 32,000 mark. Till the time it sustains above the same, we maintain our positive stance for an up-move towards 32,750 level.

Nifty futures closed marginally negative at 12,276 level with a loss of 0.11 per cent. Long buildup was seen in ZEEL, Berger Paints, Tata Chemicals, Bosch, Castrol India; while shorts were seen in NBCC, Yes Bank, LIC Housing Finance, RBL Bank and Cadila Healthcare.

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