F&O: Multiple technical indicators do not have good signals for bulls

By Chandan Taparia

Nifty opened negative and witnessed sustained selling pressure throughout Monday as it drifted towards the 10,880 level. The index continued to see weakness for the fourth consecutive session, and corrected about 450 points from 11,341 to 10,882 levels. The index has been making lower highs and lows for last three sessions and has broken the rising support trend line by connecting all the major swing lows.

Technical indicator RSI has turned lower from the overbought territory, with followup action on the daily scale, while the weekly RSI is also set for a negative crossover, which doesn’t bode well for the bulls from a short-term point of view.

As long as Nifty holds below the 11,000-11,050 zone, weakness may continue and drag it towards 10,800 level and then the 10,650-10,600 zone, while on the upside, hurdles are shifting to 11,050 and then 11,150 levels.

India VIX moved up 4.11 per cent to 25.18 level. A further spike in volatility may trigger a decline in the market. Nifty had maximum Put open interest at 11,000 followed by 10,000 levels, while maximum Call OI was at 11,500 followed by 11,000 levels.

Marginal Call writing was seen at strike prices 11,000 and 10,900 while there was Put writing at 11,000 and then 10,700 levels. Options data suggested a trading range between 10,700 and 11,200 levels for next few sessions.

Bank Nifty continued its weakness for the fourth consecutive session and broke its 50-day EMA on a closing basis, which was earlier acting as a key support since last two months.

The index has corrected around 2,200 points from 23,200 to 21,000 levels in last nine sessions and has come closer to its previous swing low of 21,000. The index has been making lower top and bottom and resistances are gradually shifting lower.

As long as the index holds below 21,600 level, weakness could be seen towards 20,500 and then 20,250 levels, while on the upside, immediate hurdles have shifted to the 21,600-21,800 zone.

Nifty futures closed negative at 10,918 level with a loss of 1.60 per cent. The trade setup looked positive in Titan, Mindtree, Jindal Steel, Cadila, Tata Consumer and SRF but it was weak in IndusInd Bank, Indiabulls Housing, RBL Bank, Equitas, GAIl, IGL, ONGC, M&M Finance, LIC Housing Finance.

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