Nifty, Bank Nifty consolidates but the overall structure remains positive; watch out for these actions

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Specific action to actions to support the market in the current economic situation. (Photo: REUTERS)

By Chandan Taparia

The Nifty 50 index opened positive yesterday and broke yesterday’s high, but moved relatively within a narrow range. He remained consolidating most of the day and experienced slight weakness in the final hour. It formed a small bearish candle on the daily scale and closed flat, but was hovering near the highs of the previous session. Now it should continue to hold above the 17500 areas, for a bullish move towards the 17650 and 17777 areas as support is placed at 17350 and 17272 areas.

India VIX fell 0.17% from 16.52 to 16.49 levels. The surge in India VIX over the past few sessions has given a volatile swing and now it needs to cool below 14 zones to continue the bullish position in the market. On the options front, the maximum OI Put is at 17000 followed by 17500 strike while the maximum OI Call is at 17500 followed by 18000 strike. The Marginal Call entry is seen at 17600 then 17500 strike while the Minor Put entry is seen at 17300 then 17250 strike. The options data suggests a wider trading range between 17,000 and 17,800 areas while an immediate trading range between 17,300 and 17,700 areas.

Nifty and Bank Nifty are consolidating in the upper zones but the overall structure remains positive. Specific action to actions to support the market in the current economic situation.

Bank Nifty must hold above 37,000

Bank Nifty opened a positive open yesterday but did not break above Tuesday’s high and remained low all day. It continues to form higher lows from the past three sessions and has formed a bearish candle on the daily scale. Now it needs to continue to cross and hold above 37000 to see a rebound towards the 37350 and 37800 levels while on the downside major support is seen at 36,500 levels.

For Weekly Bank Nifty, the maximum OI Put is 37,000 strike and the maximum OI Call is set at 37,000 strike. We have seen the call writing at 37000 and 38500 while the put writing is seen at 36500 with an unwinding at 37200 strike.

What to watch out for

From a sector perspective, the Media, Realty and IT counters pulled the market down, while weakness was observed in Private Banks and some decline in profit taking in Financial Services stocks.

We have a positive position in Real Estate (DLF and Godrej Properties), Open Themed Equities (PVR, Indian Hotels), Consumer (Mcdowell Holdings, United Breweries), IT (Tech, Hcl Technologies, Mindtree, LTI and LTTS), selective Metal (Hindalco) according to the results of the American FED meeting. Expect a move into new lifetime high areas in the Nifty Index if the US Fed’s results don’t disappoint the streets.

(Chandan Taparia is Vice President – Equity and Technical Derivatives, Brokerage and Distribution, Motilal Oswal Financial Services. The opinions expressed are those of the author. Please consult your financial advisor before investing.)

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