F&O Manual| Bulls push Nifty to new highs; positive bias unchanged as long as support at 23,350 defended

The volatility index continue to trade below 13%. ICICI Securities does not expect it to move further lower and expects it to see a up move towards 16 once again.

Bulls continue to push Indian benchmark indices to new highs, with Nifty reaching a record high of Rs 23,579.05. According to experts, as long as the support level for Nifty at 23,400-23,350 is defended, it will likely attempt to test new highs in the 23,700-23,800 range. Currently, no correction or exhaustion is in sight.

At 12:06 hours IST, the Sensex was up 257.50 points or 0.33 percent at 77,250.27, and the Nifty was up 72.40 points or 0.31 percent at 23,538.00. About 1,902 shares advanced, 1,539 shares declined, and 127 shares were unchanged.

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

Open interest analysis shows that heavy call writing is seen at the 24,000 strike, indicating strong resistance. Strikes across 23,800 to 23,950 also show heavy call build-up, indicating immediate resistance. Put writing is observed across 23,100 to 23,450 strikes, indicating strong support.

According to JM Financial, "Weekly closing was above 23,400 as bulls comfortably take over this level. As long as the support of 23,400-23,350 is defended, it will attempt to test new highs in the 23,700-23,800 range. No correction or exhaustion is in sight."

"The broader trend continues to be positive as the index has made a new record high supported by broader market participation. The near-term support base has shifted to 23,350, with potential for the index to rally towards 23,900," said Ruchit Jain, Lead Research at 5Paisa.com.

ICICI Securities also notes that they believe Nifty may attempt to move higher, with immediate support near the 23,200 level.

Strategy:

Traders can adopt a buy-on-dip approach for the index, using any dips in the range of 23,500-23,450 to buy, recommended Jain. "The stop loss on long positions should be placed below the support of 23,350 for a potential near-term target of 23,700 followed by 23,900," he added.

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Bank Nifty:

"Despite the range-bound move, Bank Nifty managed to close above the 50,000 mark and is likely to move further higher towards life highs in the coming sessions, with immediate support at 49,200 levels. From the options front, the Banking index has the highest options base at ATM 50,000 strike with relatively high call writing. Thus, the sustainability of current levels may trigger a round of covering towards 51,000 levels, while the strengthening put base at ATM and OTM strikes may keep the downsides limited," stated ICICI Securities.

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