F&O: Nifty50 structure looks bullish; supports shift higher

Going forward, Nifty will face resistance at 9,730 and then 9,889 levels.

By Chandan Taparia

Nifty50 started Friday’s session on a negative note and corrected in initial trades. However, it rebounded piercingly from lower levels and rallied more than 200 points from the intraday low of 9,377. The index continued its positive momentum for the third consecutive session and managed to conclude the truncated week with a gain of 6 per cent. The index sustained above the trendline breakout and 50-day EMA and formed a bullish candle on both daily and weekly charts.

Since last few sessions, we have been witnessing strong market breadth and consolidation breakout in many sectoral indices, indicating broadbased buying interest. Momentum oscillator RSI is also placed positively on the daily chart and, thus, we may see continuation of the up-move in the coming days. Going forward, Nifty will face resistance at 9,730 and then 9,889 levels, while support is inching higher to the 9,375 – 9,300 zone.

Since it is the beginning of a new series, options data lay scattered at various strike prices. Maximum Put open interest stood at 9,000 followed by 8,500 levels, while maximum Call OI was at strike 10,000 followed by 9,500. There was marginal Call writing at strike price 9,600 followed by 10,000 while Put writing was seen at 9,000 followed 9,500 levels. Option data suggested a wider trading range between 9,000 and 10,000 levels.

India VIX moved up 0.67 per cent to 30.22 level. Volatility has been falling since last three consecutive weeks, which is supporting the benchmark indices.

Bank Nifty started the session with a marginal loss and fell below Thursday’s low in initial trades. But it witnessed a smart recovery in the later half and rallied by more than 600 points from the intraday low of 18,730. The banking index continued the winning streak for the fourth consecutive session and formed a bullish candle on the daily chart. However, it rallied 11.68% on a week-on-week basis and formed a big positive candle on the weekly chart.

Nifty is sustaining well above the 20-day EMA and the Falling Trend line, which is a positive sign for the index. At the current juncture, the RSI oscillator is moving northward on the daily chart and is thus showing strength. Considering the overall chart structure, we may see further bounce in Bank Nifty towards the 20,000 mark, while support can be seen around 18,500 and 18,000 levels.

Nifty futures closed positive at 9,482 with 0.57 per cent gain. Long buildup was seen in Wipro, Colgate-Palmolive, Godrej Properties, Torrent Power and Petronet LNG while shorts were seen in PFC, Lupin, Axis Bank, Torrent Pharma and Tata Consumer.

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