Nifty index started the January series on a positive note and headed towards 12,250 levels by forming a bullish candle on daily scale on December 27.
However, it formed a Doji candle on weekly scale and moved within the territory of penultimate week's range and thus formed an Inside Bar pattern on weekly chart.
Price setup indicates indecisiveness among the market participants and requires a follow up to see the fresh momentum. It breached lower highs – lower lows sequence of last three trading session and now it has to hold above 12,100 to witness an upmove towards 12,400 while on the downside major support is seen at psychological 12,000.
India VIX fell from 12.32 to 10.52 levels on week-on-week basis. VIX is currently hovering around its strong support zone of 10 – 11 and thus we see reversal in VIX in coming days.
On January options front, maximum Put open interest is at 12,000 followed by 11,500 strike, while maximum Call open interest is at 12,500 followed by 12,200 strike. We have seen Call writing in 12,700 and 12,500 strike while Put writing is at 12,000 and then 12,200 strike. Option data suggests a wider trading range in between 11,900 to 12,500 levels.
Bank Nifty took support of a rising trend line on daily scale and rallied sharply. It posted a highest ever daily and weekly close and formed a positive candle on daily chart. It is making higher highs – higher lows for second consecutive week and formed a Dragonfly Doji candle on weekly chart, which indicates that buying interest emerged from lower levels. Till the time it sustains above its immediate support of 32,000 mark, we may see an upmove towards 32,750 – 33,000 levels.
Stocks specific positive price pattern is seen in ICICI Bank, Bajaj Finance, SRF, Jubilant Foodworks, PVR, Manappuram Finance, ONGC etc.
Nifty witnessed rollover of 70.44 percent with roll cost of 0.50 percent as compared to previous month roll of 79.64 percent. Bank Nifty witnessed higher rollover of 78.46 percent versus last month of 70.56 percent.
Nifty started the January series with open interest of 12.26 million shares compared to 14.70 million shares at the start of December series, open interest remained lower on month-on-month basis as some position were liquidated.
Rollover data suggest that index has seen lower rolls compared to its quarterly average of 78.66 percent and both the indices are light on positions. Thus, fresh build-up in coming days will decide further trend for January series. However, overall data setup suggests undertone of the market is bullish and we maintain our buy on dips strategy till Nifty holds above its crucial support of 11,950-12,000 levels for a positional move towards 12,500 and even higher levels.
(The author is Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited.)Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.