market analysis: What do futures & options tell us about the undercurrent in Nifty?

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Nifty opened gap down on Monday, but managed to hold the 14,400 level and slowly recovered most of its intra-day losses to close the day on a flat note.

Technically, it formed a Bullish Candle on the daily timeframe chart, as it closed above the opening level, and reclaimed its 50-day EMA. Now, it has to hold the 14,600 level to witness a bounce towards 14,800 and 14,880 levels, while on the downside support exists at 14,500 and 14,400 levels.

India VIX moved up 2.88% from 23.02 to 23.69 levels. India VIX needs to hold below 20 level to again create a bullish stance.

Since it is the beginning of a new series, options data lay scattered at different strike prices. On the options front, maximum Put Open Interest stood at 14,000 level followed by 13,500 while maximum Call OI was seen at 15,000 level followed by 15,500. Options data suggested a wider trading range between 14,200 and 15,200 levels.

Bank Nifty opened with a gap down and moved in a consolidative manner throughout the session. Banking stocks underperformed the broader market and the index broke its immediate support at 32,000 level. It settled the day with a loss of around 300 points and continued to form lower highs and lows for the second session in a row. The index formed a Bullish Hammer sort of candle on the daily scale, which indicated buying interest at lower levels after the correction of last three sessions.

Now, the index has to hold above 32,250 level to witness a bounce towards 33,000 and 33,333 levels, while support on the downside exists at 32,150 and 32,000 levels.

Nifty futures closed flat to positive at 14,695 level with 0.03% gain. Among specific stocks, the trade setup looked bullish in BHEL, Adani Enterprise, Marico, SAIL, ICICI Pru Life, , Tata Steel, NMDC, Apollo Tyre, Maruti, Asian Paint, Bajaj Finance, SRF, SBI Life, Cadila Healthcare, Tata Consumers, Hindalco, and Divi’s Labs but weak in Titan, , RIL, RBL Bank and BPCL.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)

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