Nifty index opened positive but failed to hold its opening gains and corrected towards 8,638 mark with a volatile move post RBI policy. However it recovered from lower levels but failed to surpass 8,700 zones and closed with the loss of around 35 points.
It formed a Bearish Belt Hold candle near to the upper band of rising channel at its 52 week high levels followed by a Doji candle on last Monday. It has been witnessing buying interest on decline but on higher side follow up buying is missing. Now it has to hold above 8,665 and to cross above 8,700 zone to witness an up move towards 8,750-8,777 zones while on the downside multiple supports exist at 8,620 then 8,550 zones.
On the option front, maximum Put OI is at 8,500 followed by 8,600 strike while maximum Call OI is intact at 9,000 followed by 8,800 strike. We have seen fresh and aggressive Call writing at 8,700 strike which may keep the index in a trading range for next couple of trading sessions while intact Put writing at 8700 strike may keep the limited downside in the market.
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India VIX fell down by 0.36 per cent at 14.53 levels and lower volatility may keep the range bound move in the market.
Put Call Ratio has recovered from 0.87 to 1 levels in last 3-4 sessions which is indicating the comfort zones of Put writers and suggesting a limited down side even after being in overbought trading territory.
Bank Nifty has been struggling to cross and hold above 19,000 zones from last couple of session. It has to cross and hold above 19,000-19,050 zone to start the next leg of rally towards 19,250 then 19,500 zones while 18,750 then 18,500 are likely to act as a major supports.
(The author is derivatives analyst, equity research at Anand Rathi Financial Services)