F&O: Option data suggests Nifty’s trading range between 12,000 and 12,500 levels

By Chandan Taparia

NSE Nifty continued its positive momentum for a third consecutive session and made a new lifetime high of 12,337. The index consolidated in a 50-point range for most part of the session and formed a bullish candle on daily scale. The rally was mainly led by a decent gains in IT and FMCG stocks. Overall trend is positive and supports are gradually shifting higher.

Now the index has to continue to hold above 12,220-12,250 for an upmove towards 12,400 and then a fresh rally towards 12,500. On the downside, major support is seen at 12,200 and then 12,150.

On the options front, maximum Put open interest (OI) was at 12,000 followed by 11,500 strike, while maximum Call OI was at 12,500 followed by 12,600 strike. We have seen Call writing at 12,600 strike, while Put writing was seen at 12,300 and then 12,200 strike. Option data indicates a trading range between 12,000 and 12,500 levels.

India VIX moved up by 1.38 per cent to the 14.27 level. Sharp cut in VIX provided comfort to the bulls, but overall volatile swings likely to continue in the near term.

Nifty Bank formed an Inside Bar on the daily scale, as it moved within the trading territory of the previous session. The index got stuck in a narrow range of 250 points and relatively underperformed Nifty. The banking index have to cross its strong hurdle in 32,500–32,600 zone for extension in rally towards 33,000. Support is now placed at 31,900 and 31,500 levels. Overall setup of Bank Nifty is positive and thus, traders can keep positive bias till it holds above the 31,500 mark.

Nifty futures rose 0.59 per cent to the 12,362 level. Builtup of long positions were seen in Infosys, Tata Global, Bharti Airtel, L&TFH and DLF, while shorts were seen in Lupin, Motherson Sumi, UPL, Page Industries 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)


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