The Nifty50 index opened negative and slipped towards the 10,857 level, however, it traded in a small range of 50 points for most part of the session. The index, which formed a bearish candle on the daily scale, has been forming lower highs and lower lows from the last two trading sessions.
Now Nifty has to hold above 10,850 zone, which is the 50 per cent retracement from 10,583 to 11,118 levels, while on the upside, hurdle is seen at 10,985. If index fails to hold the 10,850 level, then profit booking could continue towards the next support at 10,777 zone.
On the options front, maximum Put open interest is at 10,400 followed by 10,700 and 10,500 strike, while maximum Call OI was at 11,000 followed by 11,200 strike.
Put unwinding was seen at all the immediate strikes from 11,100 to 10,700 strikes, while Call writing was seen at 10,900 to 11,100 strikes. Option band signifies a lower shift in the trading range between 10,800 and 11,000 levels.
India VIX moved up by 1.73 per cent to 15.84 level. VIX needs to hold below 16 zone to extend positive momentum towards 10,985 zone.
Bank Nifty managed to hold 27,150 zones, but follow-up buying was missing at higher levels to surpass 27,350 zone. It has formed multiple Dojis on the daily scale from the last two sessions and formed lower lows on daily scale, which suggests selling pressure was intact at higher levels. Now it has to cross and hold above 27,350 zone to extend its move towards 27500 then 27750 zone, while on the downside, supports exist at 27000 and then 26,850 zone.
Nifty futures closed negative with a loss of 0.30 per cent at 10,924 level. Built-up of long positions were seen in Sun YV, UBL, NMDC and Concor, while shorts were seen in Apollo Hospitals, Nalco, IGL and Larsen and Toubro.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)