India VIX moved up sharply by 14.19 percent in the last week at 21 mark which is highest zones in last six months which suggests the momentum but the risk is rising for taking fresh trade at higher zones.
Nifty managed to respect its multiple support of 11,550 zones and witnessed an up move towards 11,650 zones in the last session of week. It has negated the formation of lower highs of last three sessions and formed a small Bullish candle on daily while a small Bearish candle on weekly scale.
Price set up in daily scale suggests that supports are intact while weekly scale suggests that hurdles are also visible at life time high at 11,761 zones which is restricting its upside momentum.
Index has been consolidating in between 11,550 to 11,760 zones from last eleven trading sessions and now requires a decisive hold of 11,550 zones to retest its lifetime high of 11,761 and then a fresh move towards 11,888 zones.
Nifty remained in the grip of option writer for second consecutive week and OTM option premium fell down because of Theta decay even after its jump in volatility.
India VIX moved up sharply by 14.19 percent in the last week at 21 mark which is highest zones in last six months which suggests the momentum but the risk is rising for taking fresh trade at higher zones.
On the option front, maximum Put OI is at 11,000 followed by 11,500 strike while maximum Call OI is at 12,000 followed by 11,800 strike. Put writing is seen at 11,500 followed by 11,700 strike while Call unwinding is seen at immediate strike price. Option band signifies a trading range in between 11,550 to 11,750 zones.
Bank Nifty managed to hold its previous day’s low and gradually extended its gains towards 30,000 zones. It has negated its lower highs formation after four trading sessions but formed a Bearish Candle on weekly scale. Now it has to continue to hold above 30,000 zones to witness an up move towards 30,250 then 30,500 zones while on the downside major support is seen at 29,700 then 29,500 levels.
Stock specific positive price setup is seen in Cement (Ramco Cements, UltraTech Cement, Grasim Industries), Auto (Maruti Suzuki, TVS Motor, Escorts), FMCG (ITC, Pidilite Industries), Consumer (Bata India, Titan Company, Interglobe Aviation, Voltas), Capital Goods (BHEL, Siemens, Engineers India), Pharma (Divis Labs, Lupin) while pause in positive momentum is seen in L&T, IndusInd Bank, Jubilant Food and Bhart Forge.
(The author is Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.)
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