Volatility is hovering at its higher zones signalling swings in the market and needs to cool down for stability.
By Shivangi Sarda
Nifty 50 index opened flattish on Wednesday and cascaded down to 17884 levels. It slipped throughout the day with slight recovery in the last hour and finally, closed with losses of around 170 points. It formed a Bearish candle on the daily scale and negated its higher highs formation of the last eight sessions.
India VIX marginally moved up by 0.21% from 17.78 to 17.81 levels. Volatility is hovering at its higher zones signalling swings in the market and needs to cool down for stability. On the Options front, in the Monthly series, Maximum Call OI is at 18000 then 18500 strike while Maximum Put OI is at 17000 followed by 17500 strike. Marginal Put writing is seen at 17900 and 17800 strike while minor Call writing is seen at 18300 and 18200 strike. Option data suggests a wider trading range between 17500 to 18500 zones while immediate trading range in between 17750 to 18200 zones.
Bank Nifty resistance at 38500
Bank Nifty opened negative on Wednesday and breached 37777 zones. Selective private banking counters continue to underperform and the index closed with losses of around 170 points. It formed a small bodied Bearish candle on daily scale with longer shadows indicating wild swings during the day.
For weekly Bank Nifty, Maximum Put OI is at 38000 then 37000 strike and maximum Call OI is placed at 40000 then 38500 strike. We have seen Call writing in 40000 and 38000 while minor Put writing is witnessed at 37000 and unwinding at 38500 strike. Now till it holds below 38250, weakness could be seen towards 37750 and 37500 levels while resistance can be seen at 38500 and 38850 levels.
On sectorial front, weakness was seen in IT, FMCG, Financial Services, Private Bank, Realty and Pharma counters while strength could be seen in PSU Banks, Media, Auto and Metal sectors out of which PSU Banking stocks outperformed the broader market.
Now till it remains below 18000, weakness could be seen towards 17850 and 17777 whereas hurdles exists at 18081 and 18200 marks. Both the indices are witnessing some profit booking decline with consolidation and advised to be with stock specific action in Bank Baroda, Gail, Tata Power, ONGC, Trent, HAL, Bata, Lupin, Tata Motors, Coal India, State Bank of India, Hindalco, ABFRL, IOC and Axis Bank.
(Shivangi Sarda is a Quantitative Analyst, Derivatives and Technical Research at Motilal Oswal Financial Services Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)
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