Nifty opened positive near the 10,800 mark on Tuesday, but failed to hold at higher levels and drifted towards the 10,690 mark in first half of the session. However, the index witnessed a decent recovery of 100 points from lower levels as the bulls took the opportunity to buy the decline. The index finally closed near the 10,800 mark, which was its opening level.
Technically, the index formed a Pin Bar, or a Hanging Man, candle kind of pattern on the daily scale, as its closed near the opening high. It negated the formation of higher lows of last five sessions, but managed to hold its recent gap up in the 10,631-10,695 zone. The major trend of the index is positive, as declines are being bought into on many of the heavyweight counters. Now, it has to hold above 10,650 level to extend its move towards the 11,000 level, while on the downside, supports shifted higher to 10,550 and then 10,450 levels.
India VIX fell around 0.39 per cent to 25.10 level. A gradual decline in volatility, which has been falling from last three weeks and is at the lowest level in four months, suggests an overall bullish stance.
On the option front, maximum Put open interest stood at 10,000 followed by 9,500 levels, while maximum Call OI was at 11,500 followed by 11,000 levels. There was Call writing at strike prices 11,200 and 11,300 levels, while Put writing was seen at 10,500 and then 10,700 levels. Options data suggested an immediate trading range between 10,400 and 11,060 levels.
Bank Nifty held the 22,000 level in morning dip and witnessed a strong move towards the 22,700 by surpassing the previous hurdle at 22,500. It has seen the highest daily close in 75 sessions and witnessed strong buying interest in most of the banking stocks. It formed a bullish candle with respect to the rising trend line on the daily scale. Now it has to hold above 22,000 level to witness an up-move towards 23,000 level, while on the downside, support is seen at 21,500 level.
Nifty futures closed flattish at 10,756 level. Positive trade setup was seen in stocks like M&M Finance, Bajaj Finance, Ujjivan, IndusInd Bank, Eicher Motors, Escorts, ICICI Bank, Infosys, Axis Bank, Dabur, Havells and Mindtree while structures were weak in IGL, MGL, Power Grid, HPCL, BPCL and Sun TV.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)