Chandan Taparia
Nifty index managed to respect and turn higher with the support of its 50 DEMA after the profit booking decline in the first three trading sessions of the last week. It negated the formation of lower highs after the four trading sessions which indicates existence of bulls to drive the move towards the upper band of the trading range.
It made a Bullish Candle on daily chart followed by a Bullish Harami whereas Bearish Engulfing got formed on weekly scale. Price setup implies that supply is visible at higher levels but at the same time decline is being bought near to key support zones.
Now it has to continue to hold above 12,150 levels to witness an upmove towards 12,350 then 12,430-12,450 zones while immediate support remains intact at 12,100-12,080 levels.
India VIX moved up by 10.12 percent from 14.13 to 15.56 levels on weekly basis. VIX continued its surge for fourth consecutive week and expecting it to move higher ahead of upcoming Union Budget 2020.
On the options front, maximum Put open interest is at 12,000 followed by 12,200 strike, while maximum Call open interest is at 12,500 followed by 12,300 strike. We have seen good amount of Put writing in 12,200 and 12,250 strikes while marginal Call writing was seen at 12,450 followed by 12,350 strike. Option data indicates a shift in slightly higher trading range in between 12,100 to 12,500 levels.
Bank Nifty continued its formation of lower highs on weekly scale for third consecutive weeks but managed to witness some recovery in last two trading sessions. It formed a bullish candle on daily scale while bearish candle on weekly scale which suggests dips are being bought into while supply pressure is visible at higher levels with underperformance of this rate sensitive index.
It bounced back sharply from its crucial support of 30,600-30,800 levels and now it needs to hold above 31,000 to witness an upmove towards 31,500-31,600 levels while on the downside major support is seen at 30,800 levels.
Stock specific good momentum is seen in many mid and small cap stocks while index got stuck in range with underperformance in Bank Nifty index. Nifty midcap index has given a consolidation breakout and many stocks have gathered momentum.
Stock wise positive setup in Bata India, Nestle, Dabur, Britania, Siemens, Escorts, Century Textiles, Ramco Cement, UltraTech Cement, JK Cement, AU Small Finance Bank, IRCTC etc. Upcoming days could drive some volatility ahead of Budget expectation.
(The author is Vice President | Analyst-Derivatives at Motilal Oswal Financial Services)
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