F&O: India VIX must cool down to 16-17 levels for Nifty to revive
By Chandan Taparia
The NSE Nifty opened in the negative zone on Tuesday and slipped below the previous swing low of 10,138 by correcting towards the 10,100 level. However, it recovered from the days low and formed a Doji candle after the decline of last three sessions.
The index has corrected by around 600 points from the swing high of 10,710 to 10,102 zones. Nifty may remain under pressure in the short term, but if it manages to cross and hold above the 10,200 level, then a bounce could be seen towards 10,250 and then 10,333. However, a hold below 10,138 could open the further decline towards 10,000-9,952 zone.
On the option front, maximum Put OI stood at 10,000 followed by 10,100 strike, while meaningful Call OI congestion is at 10,500 followed by 10,400 strikes. We have seen Call writing at 10,200 followed by 10,300 strike, while Put unwinding is seen at all immediate strike prices. Option band signifies an immediate trading range between 10,000 and 10,350 levels.
India VIX fell down sharply by 10.87 per cent to 19.03. During the session the volatility index made a high of 22.35, but cooled off even as the market remained weak. This hints towards an early sign of consolidation in the market. However, VIX has to go down below 17-16 levels to rescue the bulls after the sharp cut of the last two months.
Bank Nifty index opened negative, but managed to hold its opening lows and recovered by around 200-250 points from the lower levels. it closed negative but formed a small bullish candle, as it closed higher than the opening levels. Bank Nifty has remained resilient for the most part of the month, as Nifty traded down by 7 per cent, while Bank Nifty is almost flattish on a month-on-month basis.
Now, the index has to hold above the 25,000 level to witness a bounce towards 25,250 and then 25,500, while supports seen at 24,750 and 24,650 levels.
Nifty futures closed at 10,182 with a loss of 0.49%. Longs were seen in Indiabulls Housing Finance, TVS Motor, HDFC and Max Financial Services while shorts were seen in KSCL, Power Grid, Asian Paints, Tech Mahindra, ONGC, Ambuja Cement, KPIT and Ceat.
(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)