Nifty may see more weakness till it remains below 18450, Bank Nifty may surge if it holds 39300

Updated: October 21, 2021 8:40 AM

Nifty and Bank Nifty are facing profit booking decline pressure at higher zones and higher volatility signals caution ahead. Traders are advised to remain light in their positions.

Nifty, Bank NiftyOption data suggests an immediate trading range in between 18100 to 18600 zones. (Image: REUTERS)

By Shivangi Sarda

The Nifty 50 index opened flat to positive yesterday but failed to surpass 18450 zones and broke its immediate support levels. Bears took over the index and it fell sharply towards 18200 zones to finally close with losses of around 150 points. It formed a Bearish candle on the daily scale and started to form lower highs on daily scale.

India VIX rose up by 5.37% from 17.38 to 18.31 levels. Spike in volatility from last three days suggests volatile moves in the market. Now VIX needs to cool down below 15-14 zones to continue the smooth market ride. On Option front, Maximum Put OI is at 17500 followed by 18000 strike while maximum Call OI is at 18500 followed by 19000 strike. Call writing is seen at 18300 then 18400 strike while minor Put writing is seen at 18200 than 17500 strike. Option data suggests an immediate trading range in between 18100 to 18600 zones.

Nifty and Bank Nifty are facing profit booking decline pressure at higher zones and higher volatility signals caution ahead. Traders are advised to remain light in their positions.

Bank Nifty opened flattish and it moved within a range throughout the session. Despite weakness in the broader market, the banking index held on to its immediate support zones. It formed a Doji sort of candle on daily scale as it closed near its opening levels but negated its higher highs of the last seven sessions.

For weekly Bank Nifty, Maximum Put OI is at 38000 strike and maximum Call OI is placed at 40000 strike. We have seen Call writing in 39500 and unwinding at 41500 while Put writing is witnessed at 39400 strike. Now it has to hold above 39300 zones to witness an up move towards 40000 levels while on the downside major support is seen at 39000 and 38750 levels.

On the sectoral front, baring PSU Banks and Media space, all other sectors traded in the negative territory out of which Realty and Metal showed the most signs of weakness.

We have a positive stance in PSU Bank (State Bank of India, Canara Bank, Bank of Baroda), Private Bank (ICICI Bank, AXIS Bank), ZEEL, BHEL, LTI, Indian Hotels and Tech Mahindra. Now till Nifty remains below 18450 levels, weakness could be seen towards 18150 and 18050 levels whereas resistance exists at 18450 and 18600 zones but Bank Nifty shows strength and hold of 39300 could give some bounce back from lower zones.

(Shivangi Sarda is a Quantitative Analyst, Derivatives and Technical Research at Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)

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