F&O: Nifty forms lower tops, Put unwinding to push it further down
ET CONTRIBUTORS|
Updated: Sep 22, 2017, 04.31 PM IST
By Chandan Taparia
The Nifty50 index continued to see selling pressure for the fourth trading session on Friday and corrected sharply towards the 9,950 mark. It witnessed sustained selling pressure throughout the day and closed with the deep cut of 160 points.
The index started to form lower tops and lower bottoms and formed a Bearish Candle similar to a Bearish Belt Hold pattern on the daily chart. Short-term weakness could take it towards 9,920 and 9,880 levels as long as it holds below the psychological 10,000 mark.
On the upside, resistance levels shifted lower to 10,020 and 10,080 levels. The index has seen the biggest single-day fall in last 10 months and given the lowest daily close in last ten trading sessions.
On the weekly scale, the index formed a Bearish Engulfing pattern as it snapped the entire gains of last week and closed below the previous week’s low. Technical indicators started to give a sell signal as the index turned lower after hitting a new lifetime high earlier this week.
On the options front, maximum Put open interest shifted to strike price 9,900 followed 10,000 while maximum Call OI stood at 10,200 and 10,100. Significant fresh Call writing was seen all strike prices from 10,000 to 10,200, which pushed the index lower. Put unwinding was seen at all strike prices from 10,200 to 9,900, which created scope for further declines.
India VIX moved up sharply by 11.52 per cent to 12.97. A jump in VIX beyond 12.50 has taken the market into the bear grip for a short term perspective.
Bank Nifty fell around 1.74 per cent and corrected sharply towards the 24,340 mark. It has been making lower highs and lower lows since last three sessions and recently corrected from 25,100 to 24,340 level.
The index has broken the immediate support at 23,500. A hold below the same level could drag it towards 24,150-24,000 levels while it faces resistance at 24,800 level. Bank Nifty has failed to surpass the lifetime high of 25,198 and corrected around 750 points in last four sessions.
Nifty futures closed in the negative at 9,975 with a loss of 1.61 per cent. Short buildup was seen in Jindal Steel, Yes Bank, Union Bank, Reliance Capital, Godrej Industries, Britannia, Ambuja Cement, Shriram Transport, Canara Bank, PFC, IRB, PNB, ICICI Bank, DCB Bank and McDowell while longs were created in Tata Motors, HCL Tech and UBL.
(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)
The Nifty50 index continued to see selling pressure for the fourth trading session on Friday and corrected sharply towards the 9,950 mark. It witnessed sustained selling pressure throughout the day and closed with the deep cut of 160 points.
The index started to form lower tops and lower bottoms and formed a Bearish Candle similar to a Bearish Belt Hold pattern on the daily chart. Short-term weakness could take it towards 9,920 and 9,880 levels as long as it holds below the psychological 10,000 mark.
On the upside, resistance levels shifted lower to 10,020 and 10,080 levels. The index has seen the biggest single-day fall in last 10 months and given the lowest daily close in last ten trading sessions.
On the weekly scale, the index formed a Bearish Engulfing pattern as it snapped the entire gains of last week and closed below the previous week’s low. Technical indicators started to give a sell signal as the index turned lower after hitting a new lifetime high earlier this week.
On the options front, maximum Put open interest shifted to strike price 9,900 followed 10,000 while maximum Call OI stood at 10,200 and 10,100. Significant fresh Call writing was seen all strike prices from 10,000 to 10,200, which pushed the index lower. Put unwinding was seen at all strike prices from 10,200 to 9,900, which created scope for further declines.
India VIX moved up sharply by 11.52 per cent to 12.97. A jump in VIX beyond 12.50 has taken the market into the bear grip for a short term perspective.
Bank Nifty fell around 1.74 per cent and corrected sharply towards the 24,340 mark. It has been making lower highs and lower lows since last three sessions and recently corrected from 25,100 to 24,340 level.
The index has broken the immediate support at 23,500. A hold below the same level could drag it towards 24,150-24,000 levels while it faces resistance at 24,800 level. Bank Nifty has failed to surpass the lifetime high of 25,198 and corrected around 750 points in last four sessions.
Nifty futures closed in the negative at 9,975 with a loss of 1.61 per cent. Short buildup was seen in Jindal Steel, Yes Bank, Union Bank, Reliance Capital, Godrej Industries, Britannia, Ambuja Cement, Shriram Transport, Canara Bank, PFC, IRB, PNB, ICICI Bank, DCB Bank and McDowell while longs were created in Tata Motors, HCL Tech and UBL.
(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)
