Indian benchmark indices are trading negative after a strong gap up opening. Nifty has breached crucial support zone placed at 22,550, with heavy call writing at 22,600.
This, as per experts, signals opening of doors for 22,300 downside. Recovery is expected if Nifty pushes above 22,600 level.
Bars in red indicate the change in open interest (OI) of call writers, while the green bars show the change in OI of put writers
Akshay Bhagwat, Senior Vice President of Derivative Research at JM Financial, noted that although the Nifty opened strong, the opening gains were short-lived as the 22,800 barrier once again failed to be breached. A sharp sell-off of over 250 points from the day's high has caught the 22,500 put writers off guard. Shedding at 22,500, along with shifting to lower strikes in puts, has intensified the fall.
"A breach of the 22,550 spot Nifty support is a negative/caution signal, opening doors for a downside target of 22,300. Recovery hopes now rest only if the Nifty stages a comeback above 22,600," said Bhagwat.
Sameet Chavan, Head Research, Technical and Derivative - Angel One explains that technically, the immediate support was at the 22,550-22,500 mark, followed by 22,400, coinciding with 20 DEMA. "While on the higher end, the highs of 22,780-22,800 remain a daunting task for the bulls to conquer, post which only we could eye for the 23000 milestone for Nifty," said Chavan.
Among individual stock, long build up is seen in Torrent Pharma, Cummins India, BHEL and Coal India. While short build up is observed in Coforge, MRF, GMR Infra and Titan.
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