On the Option strategy front, traders can go with Bull Call Spread or Call Ladder spread to play the positive to restricted upside bias of the market
Nifty index formed and Inside Bar on weekly scale which indicates a pause in selling pressure and an early sign of short term stability or consolidation phase in the market.
Recently, it has taken support near to its 61.80 percent retracement of the entire up leg from 10,000 to 12,103 and witnessed some recovery from 10,800 zones.
Nifty index managed to recover from immediate support of 10,925-10,950 zones and extended its move towards 11,070 levels on last trading session. It formed a Long Legged Doji on daily while a Hammer kind of Pattern on weekly scale which indicates that buying interest is visible at lower levels while at the same time follow up is missing at upper band of the falling channel.
It has been consolidating in between 10,800 to 11,180 zones from last seven trading sessions and now requires a decisive hold above 11,111 to extend its gains towards 11,180 then 11,250-11,333 zones, while on the downside supports are seen at 10,950 then 10,880 levels.
India VIX moved up by 5.11 percent from 15.84 to 16.65 levels. Volatility has been moving upwards from last three consecutive weeks which needs to cool down if index has to attract some bounce back move.
On the Options front, Maximum Put OI is at 11,000 followed by 10,700 strike while maximum Call OI is at 11,000 followed by 11,500 strike. We have seen minor Call writing at 11,200 strike while Put writing is seen at 11,000 then 10,500 strike. Maximum Call and Put OI for monthly contract is intact at 11,000 strike which indicates a tough fight between Option writers of 11,000 strikes and because of that it may consolidate in wider trading range of 10,800 to 11,250 zones.
Bank Nifty continued to consolidate in broader trading range in between 27,500 to 28,500 zones from past seven trading sessions. It formed a Bullish Candle on daily while a Hammer Candle or an Inside Bar on weekly scale which indicates that dips are being bought but it is facing hurdle near the upper band of the trading range.
Now, it needs to hold and sustain above 28,000 zones to witness a bounce towards 28,500 then 28,750 zones while on the downside supports are seen at 27,750 levels.
Stock specific positive price setup in most of the FMCG stocks (Bata India, Pidilite Industries, Asian Paint, Berger Paint), IGL, Indigo, HDFC Life, SBI Life, Axis Bank, Apollo Hospitals while negative view on Amara Raja Batteries, Wipro, Glenmark Pharma, HDFC Ltd etc.
On the Option strategy front, traders can go with Bull Call Spread or Call Ladder spread to play the positive to restricted upside bias of the market.
(The author is Derivatives & Technical Analyst at Motilal Oswal.)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.The Great Diwali Discount!
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