F&O: Nifty setup still looks pretty bullish, but rising VIX is a concern

Nifty opened flattish on Tuesday and surged all through the session after a slight dip within the preliminary hour of commerce, heading in direction of a new lifetime excessive of 14,590. The bulls have been on the go relentlessly, and are touching new highs each session. The index witnessed some consolidation within the final hour of the session, but lastly settled with a achieve of round 90 factors.

The index shaped a wholesome bullish candle on the each day scale and continued to type greater highs for the final 14 classes. Now, it has to carry above 14,400 stage to witness a contemporary transfer in direction of 14,750 after which 15,000 ranges, whereas on the draw back, main help exists at 14,300 and 14,200 ranges.

India VIX rose 2.09% from 22.38 to 22.84 stage. Volatility is transferring up due to rising implied volatility in Calls and wishes to chill down beneath 20 stage to type a greater market base.

On the Options entrance, Maximum Put open curiosity stood at 14,000 stage adopted by 13,000, whereas most Call OI was seen at 15,000 after which 14,000 ranges. There was Call unwinding in any respect fast strike costs whereas minor Call writing was seen at 15,000 and Put writing at 14,500 and 14,400 ranges. Options information urged a wider buying and selling vary between 14,000 and 15,000 ranges, because the fast buying and selling vary stood between 14,300 and 14,800 ranges.

Bank Nifty opened unfavorable, but noticed a fast restoration within the preliminary half of the session, taking help on the 31,750 stage. The second half of the session noticed rangebound commerce. The banking index settled with a achieve of almost 340 factors. It shaped a Bullish Engulfing candle on the each day chart and noticed the best each day shut. Now, it has to carry above 32,000 stage to witness a bounce in direction of 32,613 and 33,000 ranges, whereas on the draw back help exists at 31,750 and 31,500 ranges.

Nifty futures closed constructive at 14,596 stage with 0.74% positive factors. The commerce setup regarded constructive in Tata Motors, Bank of Baroda, Tata Chemicals, Ashok Leyland, PEL, Chola Finance, Eicher Motor, Coal India, SBI, Exide Industries, Bharti Airtel, Wipro, Federal Bank, Escorts, HDFC Bank, Hero MotoCorp, Bharat Forge, IGL and ICICI Bank but weak in Titan, Nestle India, HUL, Kotak Bank, Divi’s Labs and IndiGo.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are suggested to seek the advice of monetary advisers earlier than taking an funding calls based mostly on these observations)