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market today: F&O: Vix slips; options show a tight bear grip on the market

By Chandan Taparia


The Nifty50 index had a volatile session on Tuesday as the bulls and the bears both fought a tug of war to defend the 10,400 and 10,300 levels, respectively. The index managed to recover towards the 10,385-10,400 zone, but absence of followup buying took it back to 10,300 level. It failed to surpass Monday’s high of 10,398 and formed a Bearish Belt Hold candle by nullifying the previous day’s formation of Bullish Hammer on the daily scale.

Recently, it had taken support at its rising trend line formed by connecting its major swing lows of 6,825, 7,893 and 10,200 levels, but absence of followup confirmation suggests the bears are holding a tight grip on the market. Now, it has to hold above 10,300 to extend its bounce towards 10,400 and then 10,500 levels, while on the downside, the 10,200 level could act as an immediate support, below which Nifty may see fresh decline due to distress selling.

On the options front, maximum Put open interest was at 10,000 followed by 10,500 while maximum Call OI was at 11,000 followed by 10,800. There was Put writing at 10,500 and 10,300 while Call writing was seen at 10,400 and 10,600 levels. The options band signified a hold of support while upside hurdles may remain at higher levels.

India VIX fell 1.96 per cent to 19.75 level. Overall higher volatility suggested a bear grip, but a cooloff in VIX with a topping out formation could form a short-term bottom for the market.

Bank Nifty formed a small candle, as it tried to hold above the previous day’s opening level, but was unable to hold above immediate hurdle at 24,750 zone. However, it has been forming lower top and lower bottom on the weekly scale and needs to negate the same for a durable bottom.

On an immediate basis, the index has to cross and hold above 24,750 to extend its bounce towards 25,000 and then 25,250 levels, while on the downside, major support is seen at 24,250.

Nifty futures closed in the negative at 10,304with a loss of 0.72 per cent. Longs were seen in UBL, DHFL, CanFin Homes and Bajaj Finance while shorts were seen in Engineers India, Justdial, Indigo, Titan, Exide Industries, Hexaware, Pidilite Industries and Siemens.

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




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