By Chandan Taparia
The Nifty50 index opened with gap up on Friday, but witnessed selling at higher levels and corrected towards 10,451 level. It formed a Spinning Top candle on the daily scale, which means the bulls are not loosening their grip, but the bears are putting pressure at higher levels.
The index has been making higher highs for last 10 consecutive sessions and if it negates this formation, only then a pause could be seen in the positive momentum. It closed the week at the crucial 10,480 level and a decisive hold above 10,450 is required to extend this upward move towards 10,525 and then 10,550 levels, while on the downside, supports are seen at 10,420 and then 10,380 levels.
On the options front, maximum Put open interest stood at strike price 10,300, followed by 10,200, while maximum Call OI was at 10,500 followed by 10,700. There was significant Put writing at 10,500 and the 10,400, which shifted Niftys supports higher while Call writing remained intact at strike price 10,500, which is restricting its upside momentum.
Significant Call writing was seen at 10,700, which is going to be a next resistance zone if there is Call unwinding at 10,500. The option band suggests an immediate trading range between 10,400 and 10,600 levels.
India VIX slipped 2.88 per cent to 14.14. The VIX has to cool down to extend its positive momentum.
Bank Nifty opened on a positive note but failed to hold above its crucial hurdle at 25,250. It formed a long-legged and small-bodied candle on a daily scale, which suggests a tough fight between the bulls and the bears.
The index is making higher highs and higher lows for last three weeks on the weekly scale, which implies buying at lower levels. Now, it has to hold and sustain above 25,250 to start the next leg of upward move towards 25,500 and then 25,750, while on the downside, major supports were seen at 25,000 and then 24,750 levels.
Nifty futures closed in the positive with a 0.29 per cent gain at 10,495. Long buildup was seen in Pidilite Industries, TVS Motor, MindTree, TechM, DCB Bank, Glenmark, Eicher Motors, Hindalco and Kotak Bank while shorts were seen in BEL, BPCL, Siemens, Marico, SBI, Just Dial and Wockhardt Pharma.
(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)