Nifty index opened positive but failed to continue its positive stance of last session and traded in a range with consolidation bias. It remained in a dull mood and formed a small black candle on daily chart. A strong bullish candle followed by a small negative candle indicates that buying is being witnessed on declines but follow up is missing at higher levels which is keeping the indices in a broader trading range.
Index has been consolidating in a range of 8,065 to 8,300 zones from last 18 trading sessions and now a decisive breakout on either side would give a next leg of rally post Brexit referendum which will held on this Thursday.
On immediate basis it has hurdle near to 8242-8250 zones and holding above the same may see an up move towards 8300 then 8380-8400 zones while on the downside support is intact at 8150 then 8065 levels.
On the option front, maximum Put open interest (OI) is intact at 8,000 followed by 8,100 strike while maximum Call is intact at 8300 followed by 8400 strikes. We have seen fresh Put writing at all lower strike but intact Call writing at 8300 strike is keeping the limited upside.
India VIX fell down by 1.48% at 17.26 mark but overall higher volatility may cause a range breakout in next coming sessions.
Bank Nifty underperformed the Nifty index but remained in a range. It has support near to 17,500 then 17,350 zones while on upside hurdle is intact at crucial 18000 marks.
(The author is derivatives analyst – equity research at Anand Rathi Financial Services)