F&O: Nifty50 in the bear grip; spike in VIX signals weakness

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F&O: Nifty50 in the bear grip; spike in VIX signals weakness


Nifty opened flat on Monday and breached all immediate support levels to touch an intraday low of 14,635. The bears ruled the market and the index witnessed a deep cut to finally settle with a loss of around 300 points. The index formed a Bearish Belt Hold kind of candle on the daily scale, as it remained in bear grip and continued to form lower highs and lows for the fourth trading session. Now, as long as it remains below 14,800 level, weakness can continue and take Nifty towards its next key support at 14,500 and 14,400 levels, while on the upside, hurdles are seen at 15,000 and 15,150 levels.

India VIX moved up sharply by 14.47 per cent from 22.25 to 25.47 levels. A sudden spike in VIX along with sustained selling pressure has caused fear and worry for further decline in the market due to profit booking. On the options front, maximum Put open interest stood at 14,000 level followed by 14,500, while maximum Call OI was seen at 15,000 and then 16,000 levels. There was Put writing at strike price 14,700, while significant unwinding was seen at strike price 15,000 and Call writing was seen 15,000 and 14,900 levels. Options data suggested a wider trading range between 14,300 and 15200 levels, while the immediate range was seen between 14,500 and 15,000 levels.

Bank Nifty opened flat but failed to hold above 36,000 level and continued its southward journey towards the 35,100 mark. Banking stocks were in the bear grip and dragged the index to close with a loss of around 600 points. It formed a bearish candle on the daily scale and continued to form lower highs and lows for the fourth session in a row. Now as long as it remains below 36,000 level, weakness may continue and take the index towards 34,500 and then 34,250 levels, while on the upside, a major hurdle exists at 36,500 level.

Nifty futures closed negative at 14,642 level with a loss of 2.30 per cent. Among specific stocks, the trade setup looked bullish in Vedanta, Jubilant Foodworks, Torrent Power, Tata Chemicals, Indus Tower, Grasim and

but weak in PVR, LIC Housing Finance, RBL Bank, Mindtree, M&M, Apollo Tyre, Bosch, Escorts, Federal Bank, ICICI Pru, Eicher Motor, Aurobindo Pharma, BEL, , TCS, HCL Tech, Maruti, Dabur, Ambuja Cement, Cipla and Bharat Forge.

(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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