Nifty index opened flattish and corrected towards 8600 zones in the absence of follow up buying interest. However it managed to hold the support of 8600 and bounced back to 8650 zones towards the close but finally closed negative with the loss of around 30 points. It formed a Hammer Candle near to support zones. Overall index has been consolidating in between 8475 to 8720 zones from last four weeks and has been holding the support of rising support trend line by connecting the bottoms of 8476, 8489, 8518 and recent low of 8540 mark.
Now it has to cross and hold above 8665 zones to witness an up move towards 8720 then higher levels while on the downside support remains at 8600 then 8550 zones. FIIs are net buyers from last five weeks and they have taken more than Rs 16,000 crore worth of shares in equity segment which is keeping the liquidity and supporting the market in expectation to start its next upswing even after being in overbought territory.
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India VIX (Volatility index) on NSE registered a lowest daily closing in last 8 months since December 2015 and lower volatility is giving comfort to bulls to go for buy on decline strategy.
On the option front, maximum Put OI is at 8500 followed by 8400 strike while maximum Call OI is at 9000 followed by 8800 strike. We have seen fresh Put and Call writing at 8600 strike which is keeping the index in a trading range of 100-150 points.
Bank Nifty has been struggling near to 19000 zones and has support near to 18700 then 18500 zones while hurdle at 19250-19300 then 19500 zones.
(The author is derivatives analyst, equity research at Anand Rathi Financial Services)