F&O: Bearish signals all over, Nifty looks headed for 9,000 and 8,800

By Chandan Taparia


Nifty started Tuesday’s session on a positive note on the back of favourable cues from global bourses. But, the bears took the gap-up opening as a shorting opportunity and started dragging the index lower from early hours. Nifty continued to make lower lows as the day progressed and fell below the 9,200 mark. Eventually, Nifty concluded the session a tad above the 9,200 level and formed a bearish candle on the daily chart.

The index is sustaining below the rising trend line breakdown level on the daily chart, which has bearish implications. Momentum oscillator RSI also turned southward and saw a negative crossover, which doesn’t bode well for the bulls. Looking at the overall chart structure, we are expecting this correction to continue towards 9,000 and the 8,800 levels in the coming days. On the upside, the immediate resistance is now placed at 9,450 and then 9,600 levels.

In monthly options, maximum Call open interest stood at 10,000 and then 9,500 levels, while maximum Put OI was at 9,000 and then 8,500 levels. There was Call Writing at strike price 10,000 while Put writing was seen at 9,000 followed by 8,500 levels. Options data indicated a wider trading range between 8,800 and 9,900 levels.

India VIX moved down marginally by 0.14 per cent to 43.61 level. The volatility index negated the formation of lower high-low sequence of last five weeks, and thus, we may see further pressure on the market seeing a roller-coaster ride.

Bank Nifty opened on a positive note and retested the trend line breakdown in opening trades. But, the bears were aggressive from initial trades and the selling momentum continued throughout the session. Bank Nifty corrected more than 1,000 points from its opening high and underperformed the benchmark index before concluding the session with a 2.39 per cent loss. The index formed a bearish candle for the second consecutive session. It is sustaining below a Rising Trend line breakdown on the daily chart, which is a negative sign. The RSI oscillator saw a negative crossover with its average on the daily chart. Going forward, as long as Bank Nifty sustains below 20,000 level, we maintain our negative stance for a down-move towards 18,700 and then 18,000 levels, while resistance is now placed at 20,000 and then 20,500 levels.

Nifty futures closed negative at 9,222 level with a loss of 0.68%. There was some long buildup in M&M, Naukri, Infratel, SBI Life and Marico while huge shorts were seen in United Spirits, Just Dial, Apollo Tyres, Shriram Transport Finance and SBI.

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