Nifty: F&O: Buying on declines, flattish VIX suggest a bullish undertone

Nifty opened positive on Monday, but failed to surpass previous day’s high of 16,336 and remained volatile in a broad trading range. In the first half of the session, the index failed to hold the 16,300 level and drifted towards 16,180, but the second half saw a recovery towards 16,250 level. The index formed a small-bodied candle with a long lower shadow, which indicates that declines are being bought into. Now, it has to hold above the 16,200 level to witness a bounce towards 16,400 and then the 16,500 level, while on the downside, support was seen at 16,150 and then 16,000 levels.

India VIX remained flattish at 12.60 level. Stability in volatility indicates that the bulls are holding the market to cheer the fresh momentum

On the options front, maximum Put Open Interest stood at 15,000 level followed by 16,000, while maximum Call OI was seen at 16,500 level followed by 16,300. There was minor Call writing at 16,300 and then 16,200 levels, while Put writing was seen at 16,000 and then 16,100 levels. Options data suggested a broader trading range between 16,000 and 16,500 levels, while an immediate trading range was seen between 16,100 and 16,400 levels.

Bank Nifty outperformed Nifty, as it was seeing sustained buying interest at every decline and finally closed the day with a gain of more than 200 points. It formed a bullish candle a given a decisive close above 36,000 level. Now it has to hold above 36,000 level to witness a bounce towards 36,250 and then 36,500 levels, while on the downside support are seen at 35,800 and then 35,500 levels.

Nifty futures closed flat to positive with a gain of 0.06 per cent at 16,261 level. Among specific stocks, the trade setup looked bullish in

, IRCTC, PEL, PVR, Tata Chemicals, Axis Bank, TechM, IndusInd Bank, Britania, HDFC Bank, Federal Bank and ICICI Bank but weak in , SAIL, , Torrent Power, Muthoot Fin, , BHEL, NMDC, Coal India, MGL, Voltas, Ramco Cement, PNB and .

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