Nifty must stay above 11,000 for any upside

Nifty remained highly volatile for most part of the week as it traded in a wider range of 400 points and formed a High Wave candle on weekly scale as dips are being bought but at the same time supply pressure is intact at higher levels. It formed an Outside Bar or a Hammer candle on daily scale as witnessed strong recovery from 10880 zones.

Index has got stuck in a range of 10,750 to 11,150 and requires a decisive range breakout. Now on immediate basis, it has to cross 11,000 zones to witness an upmove towards 11,111 and then 11,141 zones while on the downside supports are seen at 10,950 and then 10,880 levels.

India VIX fell down by 6.17 percent from 17.35 to 16.28 levels. Volatility has declined after the surge of four consecutive weeks which suggests some sort of stability and respect of support zones in the broader market. On the options front, Maximum Put OI is at 10800 followed by 11,000 strike while maximum Call OI is at 11700 followed by 11200 strike.

We have seen meaningful Put writing at 10,800 and 10,500 strike while Call writing is seen at 11600 followed by 11000 strike. Option data suggests a broader trading range in between 10,700 to 11,300 zones.

Chandan Taparia

Derivative & Technical Analyst|Motilal Oswal Securities

• Price pattern suggests upside could be restricted again in absence of follow up buying interest

• Volatility needs to cool down if Nifty has to attract some bounce back move

• VIX has to fall below 14 to get bulls grip in market, traders can go with Call Ladder Spread

Bank Nifty traded in wider range between 27,100 to 27,550 zones for most part of the session but closed near its opening levels. It formed a Doji Candle on daily while Inside Bar on weekly scale and relatively underperformed the benchmark index. Now it need to cross and hold above 27,500 zones to witness a bounce towards 27,750 then 28000 zones while a hold below the same could drift it towards 27,000 then 26,850 zones.

Stock wise positive setup is seen in Bata India, MCX India, United Spirits, Infosys, Petronet LNG, Dabur India, Hindustan Unilever, Siemens, etc while only weakness is seen in Kotak Mahindra Bank, IndusInd Bank and Metal stocks.

The author is Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited