Coming week likely to be more volatile, avoid aggressive long positions in Bank Nifty: Anand Rathi

The Nifty index scaled to a new high but formed a small Bearish candle on the weekly scale due to some profit-booking from the higher levels, although it continued to make a higher top and higher bottom formation on the daily chart where the immediate support is now shifted towards 12,600 levels. Hence, as long as Nifty trades above 12,600, one should remain on the long side and we can expect the further positive momentum to continue towards 13,000 levels.

Bank Nifty index continued to outperform and formed a Shooting Star candlestick pattern on the weekly scale which hints at some profit-booking from higher levels in the coming week. Hence, one should refrain from creating aggressive long positions. The Immediate support is placed at 28,500 levels and the major resistance is at 29,800 levels.

The volatility index 'IndiaVIX' is hovering near 20 levels and still in the very much comfort zone for the bulls. The overall setup is hinting that IndiaVIX is likely to remain in the range of 16-26 levels.

In the coming week, we have F&O expiry for the November series. The options data indicates that a fresh Put writing was seen at 12,800, 12,700, and 12,600 strikes where the second-highest open interest is placed at 12,800 strike which is likely to provide immediate support. If Nifty unable to sustain above 12,800 then some selling pressure towards 12,600 can't be ruled out.

A continuous Call writing was seen at 13,000 strike which also holds the highest open interest of nearly 36 lakh contracts. So, If Nifty breaks above 13,000 then we can expect a strong short-covering move towards 13,200 levels. The derivative setup indicates that the coming week is likely to be more volatile and Nifty may oscillate in a broader range of 12,600-13,000.

(Nilesh Ramesh Jain, Senior Technical and Derivatives Analyst- Equity Research at Anand Rathi Shares and Stock Brokers.)