Lower volatility suggests that a range bound bias could be seen and a decline near to support zones could be bought again in the market
Nifty failed to surpass psychological 12,000 marks in the last week and corrected towards 11,800 zones.
It started to form lower highs – lower lows from last three trading sessions and resistances are slightly shifting lower in the market.
The index formed a Bearish Candle on daily and weekly scale which suggests that selling pressure is seen at higher band of the trading range.
Overall, Nifty has been consolidating in between 11,761 to 1,2041-12,100 zones from last fourteen trading sessions and requires a decisive range breakout to commence the next leg of rally.
Till Nifty holds below 11,888 zones, it could extend its weakness towards lower band of the support at 11,761 and then a fresh decline towards 11,660 levels while on the upside immediate hurdles are seen at 11,965 and then 12,000 zones.
India VIX fell 6.46 percent from 14.86 to 13.90 levels last week and it has been falling down from last four consecutive weeks. Lower volatility suggests that a range bound bias could be seen and a decline near to support zones could be bought again in the market.
On the option front, Maximum Put OI is at 11,500 followed by 11,800 strike while maximum Call OI is at 12,000 followed by 12,500 strike. Call writing is seen at 11,900 followed by 12,000 strike while Put unwinding is seen at 11,800 then 11,700 strike.
Option data suggests a wider trading range in between 11,700 to 12,000 zones.
Bank Nifty failed to surpass previous day’s high and corrected by around 400 points to close near its lower band of the trading range at 30,600 zones. It formed a Bearish Candle on daily as well as on weekly scale with formation of lower highs which indicates that Bears are holding the grip at higher zones.
Now till Bank Nifty holds below 31,000 zones, it could extend its weakness towards next major support at 30,250 zones while on the upside hurdles are seen at 31,000 then 31,313 zones.
Stock specific, positive view is on Larsen & Toubro, Cummins India, Manapuram Finance, Tata Consultancy Services, Jindal Steel & Power, Tata Steel, Bata India and Bajaj Finance while shorts are see in many Private, PSU and NBFC stocks.
(The author is Derivatives & Technical Analyst at Motilal Oswal)Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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