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Nifty50 opened with a marginal loss and moved up in initial trade on Friday. However, it failed to cross the penultimate session’s high at 12,385 and remained in a narrow range for the entire second half of the session.
Eventually, the index formed a small-body candle on the daily chart. It moved within the trading range of the previous session and, thus, formed an Inside Bar pattern on the daily scale, indicating indecisiveness among market participants. The index is currently hovering around its strong hurdle of Rising Trendline on the weekly chart, which coincides with the 100 per cent extension level of the previous up-move on the daily chart.
Though the index is trading near its resistance level, we are not seeing any noticeable weakness in prices. Thus, traders are advised to refrain from taking pre-emptive shorts as long as the index sustains above its immediate support in the 11,280 – 12,293 range. While Nifty’s major support exists at 12,150 level, resistance is placed in the 12,450 – 12,500 zone.
On the options front, maximum Put open interest was at 12,000 followed by 12,200 levels, while maximum Call OI was at 12,500 followed by 12,400 levels. There was marginal Call unwinding at immediate strike prices and some Put Writing at 12,300. Options data indicated a trading range between 12,000 and 12,500 levels.
India VIX fell marginally by 0.37 per cent to 14.12 level. VIX showed some rangebound move, which suggests the Bulls are holding a grip. We expect volatility to rise ahead of the Union Budget, 2020.
Bank Nifty started the session on a negative note and consolidated around its key support at 31,500 level throughout the session. Eventually, it concluded the session around the opening price and formed a Doji candle on the daily chart. The banking index underperformed the benchmark indices last week and corrected about 1.58 per cent to form a red-body candle on the weekly chart. At this juncture, Bank Nifty is hovering around its bullish gap between 31,451 and 31,667 levels. It has to hold above 31,500 level to witness an up-move towards 32,000 and then the 32,500-32,600 zone. Major supports below the 31,500 mark is placed in the 30,900-31,000 zone.
Nifty futures closed flattish at 12,379 level. There was long buildup at MRF, Torrent Pharma, Bharti Airtel, CESC and IGL, while shorts were seen in Idea, Bharti Infratel, IDFC First, IndusInd Bank and Motherson Sumi.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)
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