The Nifty continued its positive momentum for the sixth consecutive session and extended its gains towards 11,680 levels. It formed a Bullish Candle on the daily and weekly scales as bulls continued to maintain their hold on the market. It started to form higher highs – higher lows from past five sessions and supports are gradually shifting higher.
The index has surpassed its falling supply trend line by connecting all the swing highs that started from 12,103, 11,981, 11,694 and 11,600 zones. Now, it has to continue to hold above 11,550-11,600 zones to witness momentum towards 11,700 then 11,850 zones, while on the downside support is seen at 11,550 then 11,480 levels.
India VIX fell down 7.07 percent from 17.14 to 15.93 levels. On the monthly options front, maximum Put OI is at 11,000 followed by 11,400 strike, while maximum Call OI is at 12,000 followed by 11,700 strike.
Put writing is seen at 11,500 then 11,600 strike, while Call Unwinding is seen at all the immediate strikes with marginal Call writing at 11,900 strike. Option data suggests a shift to a higher trading range between 11,500 and 11,800 zones.
Bank Nifty opened flattish but witnessed buying interest towards 29,250 zones in the latter part of the session. It formed a Bullish Candle on the daily and weekly scale as strong buying interest was seen at lower levels. It has been forming higher highs – higher lows from past four sessions which indicates strength with a shift in supports to higher zones.
Now it has to hold above 28,800 zones to witness momentum towards 29,500 then 30,000 zones, while on the downside supports are seen at 28,500 then 28,250 levels.
Stock specific momentum and market breadth are quite positive which suggest that the Indian market is all set to welcome the festival season. Stock wise positive set up is seen in Bata, Bajaj Finance, Asian Paint, Berger Paint, HDFC, LIC, ICICI Pru, Voltas, Dabur, HUL, Reliance Industries, Maruti, IGL, among others.
After the recovery of 600 points, is it better to trade with Bull Call spread like buying 11,650 Call and selling 11,800 Call.
Option band also suggests a shift in higher trading band and any decisive Call unwinding in 11,700 strike could mean a further momentum in the market as FIIs have also turned positive.
(The Author is Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited.)
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