NSE Nifty failed to surpass the 11,950 level on Wednesday and drifted towards 11,820 in latter part of the session by breaking its multiple support at 11,850. The index formed a bearish candle on the daily scale as selling pressure was seen at higher levels.
The headline index has broken its multiple support and started to trade below the previous week’s low with a negative crossover on mechanical indicators. If Nifty sustains below 11,850 then short-term trend could turn negative to test the next major support of 11,780 and then 11,700, while on the upside, hurdles are seen at 11,950 and then 12,000.
On the monthly options front, maximum Put open interest was at 11,600 followed by 11,500 strike, while maximum Call open interest was at 12,000 followed by 11,800 strike. We have seen Call writing at 12,000 followed by 11,900 strike, while marginal Put Unwinding was seen at all the immediate strikes. Options data suggests a broader trading range between 11,700 and 12,100 levels.
India VIX moved up by 1.31 per cent to 16.46 level.
Bank Nifty failed to surpass its previous day’s high of 31,200 and wiped out gains of the last two trading sessions. The index formed a bearish candle similar to Bearish Engulfing on the daily scale and also failed to hold above 30,800 mark. Now, till it holds below 30,800 it can drift towards 30,250 and then 30,000, while on the upside, hurdle is seen at 31,000 and then 31,250.
Nifty futures closed with a loss of 0.68 per cent at 11,862. Builtup of long positions were seen in MGL, Voltas, Max Financial Services, Amara Raja, Ashok Leyland and IGL, while shorts were seen in Sun TV, Just Dial, Equitas, Balkrishna Industries and RBL Bank.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)