Technicals: Nifty may retest 8,150 level in case of Brexit

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Mumbai | Published: June 23, 2016 4:37:33 PM

India VIX has seen a sharp surge in last three week from 13.35 to 18.82 but remained flat to negative on last session at 18.02 levels.

BSE Sensex - Brexit poll effectNifty index has been consolidating in a trading range of 8,065 to 8,300 zones from last twenty trading sessions.

Nifty index has been consolidating in a trading range of 8,065 to 8,300 zones from last twenty trading sessions. It has seen sustained buying interest on every meaningful declines but failed to hold decisively above 8,250 zones in the absence of follow up buying interest. It has marked multiple support near to 8,150 and 8,065 while crucial hurdle at 8,300 zones. Although immediate trend is intact to positive and index has given a strong closing with its second highest daily close in this month but now only a decisive range breakout post the event would give a fresh leg of rally in the market.

Now if it manages to surpass 8,300 zones post the result of Brexit referendum with positive trigger then it may head towards 8,400-8,450 zones while if Britain exits from EU then it may be a short term negative sense for the market and in that condition it may retest its support of 8,150 then 8,065 levels but also ruling the probability to fall below 8,000-7,980 zones.

India VIX has seen a sharp surge in last three week from 13.35 to 18.82 but remained flat to negative on last session at 18.02 levels.

On the option front, maximum Put OI is at 8,000 followed by 8,100 strike while maximum Call OI is at 8,400 follow by 8,500 strike. We have seen fresh Put writing at 8,200 followed 8,100 strike and 8,000 Put OI is near to 85 Lakh shares which is ruling out the probability of hitting below 8,000-7,980 zones even in worst case scenario.

We have seen Call unwinding in 8,300 strike but fresh Call writing was seen at 8,400 strike which may cap the upside limited to 8,400-8,450 zones.

We have seen a strong surge in CBOE VIX from its recent low of 12.72 to 21.22 but it was cooled on last session towards 18 which indicates volatile move but bullish trend may remain intact with lower event risk.

Put Call started the June series from 0.99 and headed towards 1.15 and now near to its highest level of the series.

Rising volatility from lower levels with rising Put Call Ratio indicates that participants are hedged and usually in a hedged market risk of panic goes lower and trend indicates on positive side.

Bank Nifty has been consolidating in a broader trading range of 17500 to 18000 zones from last fifteen trading sessions and now a range breakout on either side may give a fresh leg of rally in the market. Now if it manages to cross and hold above psychological 18000 zones then rally may extend towards 18250-18400 levels while on the downside 17500 zones is likely to act as a major support.

(The author is derivatives analyst – equity research, Anand Rathi Financial Services)

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