F&O: Over to Budget; banking stocks only hope as bears rule

India VIX moved up 3.38 per cent to 17.36 level.

By Chandan Taparia

Nifty failed to hold the 12,100 level on Friday and declined sharply towards the 11,950 mark in the later part of the session. It remained highly volatile throughout the session ahead of the Union Budget and pressure was visible at every bounceback attempt.

Eventually, the index breached the psychologically important support at 12,000 level and formed a bearish candle on both daily and weekly scales. The index closed below its 50-DEMA for the second consecutive session and broke below the lower end of the Rising Megaphone pattern on the daily chart.

As long as it remains below the 12,000 mark, Nifty could accelerate its weakness towards 11,929 and then 11,830 levels, while on the upside hurdles are seen at 12,100 and then 12,150 levels.

Since it is the beginning of a new series, Options data was scattered at various strike prices. Maximum Put open interest was at 12,000 followed by 11,500 levels, while maximum Call OI was at 12,500 followed by 12,200 mark. There was Call writing at 12,000 and then 12,500 levels while Put writing was seen at 12,000 and 11,500 levels. Options data indicated a wider swing in the market ahead of the Budget.

India VIX moved up 3.38 per cent to 17.36 level. Volatility is likely to stay higher ahead of Budget 2020.

Bank Nifty opened positive and relatively outperformed the benchmark index, as buying emerged on select banking counters. It formed a small-bodied candle on the daily scale and a bearish candle on the weekly scale. The index has been consolidating in a wider trading range between 30,600 and 31,400 levels since last nine sessions, as dips got bought into while supply pressure emerged at higher levels.

Going forward, immediate support for Bank Nifty is placed at 30,600 and then 30,250 levels, while a sustainable move above 30,800 mark may lead to a bounce towards the 31,100 – 31,300 zone.

Nifty futures closed negative with the loss of 0.50 per cent at 11,999. Long buildup was seen in Century Textiles, Jubilant Foodworks, NIIT Tech, Ujjivan, Dabur and Kotak Bank while shorts were seen in BEL, Coal India, ONGC, Oil India, Tata Motors and Colgate-Palmolive.

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