Home > Finance > F&O: Lower highs & lows suggest Nifty may fall to 9,000 & 8,800

F&O: Lower highs & lows suggest Nifty may fall to 9,000 & 8,800


By Chandan Taparia

Nifty started correcting from initial trades on Wednesday and moved towards the 9,100 mark. However, the index witnessed a sharp recovery from lower levels, which pulled it higher by more than 200 points from an intraday low of 9,116. Eventually, Nifty trimmed off all the intraday losses and concluded the session with a gain of 0.71%.

The index formed a small bullish body candle on the daily chart. It has been making lower highs and lows from last three sessions, and is sustaining below the trend line breakdown level. Looking at the overall chart structure, we maintain our negative to rangebound stance on the market and expect Nifty to fall towards 9,000 and then 8,800 levels in the coming days. However, a pullback move towards the 9,450-9,500 range cannot be ruled out. On the upside, major resistance is placed at 9,600 and then 9,889 levels.

In monthly options, maximum Call open interest was at 10,000 and then 9,500 levels while maximum Put OI was at 9,000 and then 8,500 levels. Except marginal writing in Call options at 10,000 and Put options at 9,100 and 9,200, there was no noticeable activity in other strike prices. Options data indicated an immediate trading range between 9,000 and 9,700 levels.

India VIX moved down 5.41 per cent to 41.25 level. However, the volatility index negated the lower high – low sequence of last five weeks, and thus, we may see further pressure on any bounce, giving the market a roller-coaster ride.

Bank Nifty opened flat and corrected in the first 15 minutes of trade. It managed to hold at 19,000 level and rebounded piercingly from lower levels. It rallied some 850 points from its opening low and concluded the session with a gain of 2.19% with the formation of a bullish candle on the daily chart. However, it is sustaining below a Rising Trendline breakdown on the daily chart and is making lower highs and lows since last three sessions.

If Bank Nifty manages to hold above 19,800 level, then we may see a pullback towards the 22,200-22,500 zone. Going forward, the immediate support is placed at 19,000 and then 18,700 levels, while resistance is placed at 20,200 and then 20,500 levels.

Nifty futures closed positive at 9,300 with 1 per cent gains. Long buildup was seen in NIIT Tech, TVS Motors, Voltas, Equitas and Bajaj Finance while there was shorts creation in HUL, Bank of Baroda, ITC, Tata Power and Bharti Infratel.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)

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