Nifty opened positive on Friday, but failed to hold above 11,400 level and remained consolidative taking support at 11,360 level. The index closed positive with a gain of around 65 points, but formed a bearish candle as it closed below its opening mark.
The index got stuck in a range despite followup action and formed an exhausted gap, as it opened gap up on Friday after Thursday’s gap-down start. However, it closed the week with around 1.75% gain, marking the highest weekly close in 24 weeks.
The major trend of the index remains positive, but it needs to surpass recent swing highs to commence the next leg of rally before August series F&O expiry next week. The index has to hold above 11,300 level to witness an up-move towards the 11,500-11,600 zone while on the downside support exists at 11,250 and then 11,150 levels.
India VIX fell 4.46 per cent to 19.70 level. Volatility is cooling down gradually on a week-on-week basis, which suggests a bullish stance and buy-on-decline strategy can continue in this market.
Maximum Put open interest stood at 11,000 level followed by 10,000, while maximum Call OI was at 11,500 followed by 11,600 levels. Call writing was seen at strike prices 11,600 and 11,700 while there was Put writing at 11,200 and 11,300 levels. Options data suggested a trading range between 11,200 level and the 11,500-11,600 zone in the coming few days.
Bank Nifty opened with a gap up and headed towards 22,350 level by outperforming Nifty. It formed a small bullish candle on the daily chart and a Hammer candle on the weekly scale, which indicated every decline is getting bought into. However, the banking index has seen three exhausted gaps in last three sessions, but a hold above 22,000 and a move towards 22,400 zones is giving an early sign of a breakout of the bullish consolidation.
Now, the index has to hold above 22,000 level to witness an up-move towards 22,500 and 22,750 levels, while on the downside, immediate support is seen at 21,750 and then 21,400 levels.
Nifty futures closed positive at 11,382 level with 0.68 per cent gain. The trade setup looked positive in Asian Paints, PowerGrid, MGL, HeroMoto, HDFC Bank, Berger Paint, Sun Pharma, Ramco Cement, Siemens and Ultratech Cement but weak in Escorts, Muthoot Finance and Amar Raja Battery.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)