Nifty index on the National Stock Exchange started the day in green but failed to cross above 8,660- mark and slipped towards 8,620 zones. However, sustained buying supported the index and it closed higher for second consecutive day. Nifty 50 index settled 17.70 points up at 8650.30 on Wednesday. During the day, it formed a “Dragon Fly Doji” on daily chart for second consecutive sessions which indicates that index is set to move for upper band of the trading zones.
It has been making higher lows from last one month at 8,476, 8,489, 8,518, 8,540 and 8,580 zones which also suggests that bulls are quite comfortable to hold the support zones and has the potential to start the next leg of rally by testing the recent high of 8,728 zones. Now, Nifty has to surpass and hold above 8,665- mark to witness an up move towards 8,700 and 8,728 zones while on the downside immediate support exists at 8,620 and thereafter at 8,580 zones.
India VIX (volatility index) slipped by 2.97 per cent at 13.48 and falling volatility is supporting the bulls but also ruling out the probability of major momentum in the market.
On the option front, maximum put open interest (OI) is at 8,400 followed by 8,600 strike while maximum call OI is at 8,800 followed by 8,700 strike. We have seen fresh put writing at 8,600, 8,650 and 8,700 strike while call unwinding in all the strike is giving a potential to move on higher side.
Bank Nifty managed to hold above 19,250 zones and headed towards 19,400 but ended the session on a flattish note. It has to hold above 19,300 zones to witness an up towards 19,500 zones while on the downside immediate support exists at 19,200 then 19,000 zones.
(The author is derivatives analyst, equity research at Anand Rathi Financial Services)