F&O: Pain may persist in market if Nifty50 remains below 11,535

By Chandan Taparia

Nifty opened with a gap down for yet another session on Thursday and corrected sharply towards the 11,537 mark in the initial hour of trade. It continued to make lower highs and lows for the fourth consecutive session and closed with a loss of 45 points. The index breached the Budget Day’s low in first half of the session, but took support precisely around the 50 per cent retracement of the entire up-move from 10,637 to 12,430 levels.

It then rebounded piercingly by more than 100 points from the intraday low of 11,537 in the later half. As a result, Nifty trimmed most of the intraday losses and formed a Bullish Pin Bar pattern on the daily scale in signs of relief for the bulls. This will get confirmed if followup happens next trading sessions.

The RSI oscillator is showing a positive divergence on the daily chart. However a confirmation of the same is still pending. Going forward, if Nifty sustains above 11,665 level, then we may see some pullback towards 11,777 and then 11,880 levels in coming days. However a failure move beyond 11,665 and a hold below 11,535 could result in an extension of the ongoing correction towards 11,430 and then 11,333 levels.

Since it is the beginning of a new series, options data lay scattered at various strike prices. Maximum Call Open Interest was at 12,000 and then 12,500 levels while maximum Put OI was at 11,800 and then 11,700 level. There was minor Call writing at strike price 11,800 and Put writing at 11,600. Options data was scattered at nearby strike prices, thus not giving any sense of the immediate range. As per volatility, broader trading range could be between 11,300 and 12,000 levels.

India VIX fell 2.71 per cent to 17.76 level. However, if India VIX sustains above the 18-18.50 zone, then we may see heightened volatility in the market.

Bank Nifty opened on a negative note and fell towards the 29,900 level in initial trade. The banking index breached the support from the rising trend line and 200 EMA in intraday trades; but it managed to close above the same amid a decent bounce in the latter half of the session.

The index formed a Hammer candle on the daily chart, indicating buying interest at lower levels. If Bank Nifty sustains above 30,300 level, we may see a bounceback towards 30,750 and then 31,000 levels. If it breaks the 29,900 level, selling pressure may accelerate towards 29,600 and 29,350 levels.

Except for marginal gain in pharma and FMCG indices, all other sectoral indices ended in the negative territory. Among them, realty, PSU banks and media indices were the major losers.

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