F&O: Falling VIX favours bulls, but bears giving a tough fight

By Chandan Taparia

Nifty50 opened positive and remained volatile for most part of the session on Wednesday, as it traded in wider range of 150 points. It managed to hold in the 10,935-10,950 zone and headed towards 11,080 level but finally closed the session well above 11,000 level. The index formed an Inside Bar and a bullish Harami pattern on the daily scale, which indicated a tug of war between the bulls and bears.

However, the overall structure remains rangebound with support at the 10,950 level, and it requires a decisive close above 11,111 level to extend the recent bounceback towards the 11,180 level. As of now, a hold above 10,950 level may take Nifty towards 11,111 and then 11,180 levels, while on the downside, support exists at 10,950 and then 10,880 levels.

On the options front, maximum Put open interest was at 11,000 followed by 10,700 levels, while maximum Call OI was at 11,000 followed by 11,500 levels. There was minor Call unwinding at immediate strike prices, while Put writing was seen at 11,000 and then 10,900 levels. Options data suggested a trading range between 10,800 and 11,200 levels.

India VIX fell 8 per cent to 16.35 level. A sharp cut in the volatility index has favoured the bulls, but VIX needs to hold below 15 level to get short-term stability and bounce back.

Bank Nifty formed an Inside Bar on the daily scale, as it traded in the 27,700-28,100 range on the truncated weekly expiry day. It has multiple supports near the 27,500-27,350 zone while hurdles are seen in the 28,350-28,500 zone. The index has to break out of the range with followup activities for next bounce.

Now it has to hold above 28,000 to witness a bounce towards 28,350 and then 28,500 levels, while supports exist at 27,750 and then 27,500 levels.

Nifty futures closed positive at 11,012 with 0.79 per cent gains. Long buildup was seen in Apollo Hospitals, IndiGo, Mannapuram and Reliance Industries while shorts were seen in Glenmark, Nalco, NCC and Sun 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)

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