F&O: It’s a buy-on-dips market now! Falling VIX backs the bulls

By Chandan Taparia

Nifty50 opened flat but remained consolidative for most part of Friday’s session as investors went in for buy-on-decline strategies. The index formed a small bullish candle but an Inside Bar, as it traded inside the trading range of last session. Overall, the index has got stuck in a range, forming higher lows, even as supports slightly shifted higher.

Now, it has to hold above 11,150 level to witness an up-move towards the recent swing high in the 11,333-11,350 zone and then 11,500 level, while on the downside support exists at 11,100 and then 11,050 levels.

India VIX fell 2.47 per cent to 22.57. A gradual decline in VIX from its recent high of 25.69 suggests that the bulls are using any decline as a buying opportunity and the overall trend remains bullish for a potential of range breakout.

Maximum Put open interest stood at strike price 11,000 followed by 10,000, while maximum Call OI was at 11,500 followed by 12,000 levels. Minor Call writing was seen at strike prices 11,500 and 11,600 while there was Put writing at 11,000 and 11,100 levels. Options data suggested an immediate trading range between 11,000 and 11,500 levels for the coming few days.

Bank Nifty opened flat and remained consolidative in a range of 350 points between 21,450 and 21,800 levels. It formed an Inside Bar, as it traded inside the trading range of the previous session and hovered near the 50-day EMA. The technical indicators are on the verge of turning upward and the index requires a decisive followup action to confirm the next momentum.

Now if the index manages to hold above 21,500 level, then it can bounce towards 22,000 and then 22,250 levels, while on the downside immediate support is seen at 21,250 and then 21,000 levels.

Nifty futures closed positive at 11,229 with 0.26 per cent gain. The trade setup looked positive at SRF, Asian Paint, Bajaj Finance, Apollo Hospital, Tata Motors, Cummins India, Maruti, Britannia and Divi’s Lab while it was weak Biocon, HPCL, MGL and BHEL.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)