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Nifty: F&O: Nifty trade setup negative to rangebound, may fall to 9,000

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By Chandan Taparia

Nifty started Friday’s session with a marginal loss and remained sideways throughout the session. It moved within a 100-point range, which was narrowest since February 20, 2020. Eventually, the index concluded the session around the 9,200 mark and formed a small body candle on the daily scale. It moved within the trading range of Wednesday’s session and formed an Inside Bar pattern on the daily chart, indicating indecisiveness among the market participants.

The index has been forming lower highs since last four sessions and needs to negate that for a bounceback, else weakness could persist. Looking at the overall chart structure, we maintain our negative to rangebound stance and expect Nifty to fall towards 9,000 and then 8,800 levels in the coming days. On the upside, the immediate resistance is placed at 9,350 and then 9,450-9,500 zone.

In monthly options, maximum Call open interest was seen at 10,000 and then 9,500 levels while maximum Put open interest stood at 9,000 and 8,000 levels. Except of some Call writing at strike price 10,000, no noticeable activity was witnessed at other strike prices. Options data indicated an immediate trading range between 9,000 and 9,500 levels.

India VIX moved down 3.20 per cent to 39.93 level. However, the volatility index negated the formation of a lower high-low sequence of last five weeks, and thus, we may see further pressure on any bounce in the market.

Bank Nifty opened on a negative note and remained lacklustre throughout the session. It was a perfect day for weekly option writers, as the banking index remained in a range of around 400 points, which was its narrowest trading range in last seven sessions. As a result, the market witnessed the formation of a Doji Candle and Inside Bar patterns on the daily chart, indicating indecisiveness among market participants.

Currently, the index sustains well below a Rising Trend line breakdown on the daily chart. If Bank Nifty moves above 19,800 level, only then may we see a pullback move 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 now placed at 20,200 and then 20,500 levels.

Nifty futures closed 0.76 per cent lower at 9,210 level. Long buildup was witnessed in Escorts, RIL, IndusInd Bank, M&M and Bharti Infratel while shorts creation was seen in Just Dial, Pidilite, Britannia, Berger Paint and UBL.

(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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