Nifty opened negative on Tuesday but managed to hold its immediate support at 11,820 level and witnessed good recovery from lower levels towards the 11,950 mark. It remained consolidative as it faced hurdles at higher levels and finally closed the day near the 11,900 mark. The index continued its winning streak for the third consecutive session and formed a small-bodied bullish candle on the daily scale.
Overall, the price and data setup suggested that a bounce may be in the offing, but multiple hurdles and supply pressure at higher levels could restrict the upside momentum. For now, the index has to hold above the 11,800-11,820 zone to witness a bounce towards 12,000 and 12,100 levels, while on the downside, support exists at 11,750 and then 11,666 levels.
India VIX moved up 3.99 per cent from 21.82 to 22.69 levels. It needs to cool down below 19 mark for the market to stabilise but volatility may rise ahead of the US election.
On the options front, maximum Put open interest stood at 10,500 level, followed by 11,000, while maximum Call OI was at 12,500 followed by 12,000 levels. There was Call writing at 12,000 and then 12,500 levels, while Put writing was seen at strike prices 11,500 and 11,600. Options data suggested a wider trading range between 11,500 and 12,000 levels, while the immediate trading range lies between 11,750 and 12,000 levels.
Bank Nifty opened negative but managed to hold the 24,000 level and headed towards the 24,400 mark. It has been making higher lows on the weekly scale and is holding well above the previous hurdle in the 24,000-24,200 zone. The index formed a bullish candle on the daily scale and is making higher highs and lows since last three sessions. Now it has to hold above 24,000 level to witness a bounce towards 24,750 and then 25,000 levels while on the downside support exists at 23,750 and then 23,500 levels.
Nifty futures closed flat to positive at 11,895 level with the 0.05 per cent gains. The trade setup looked positive in Asian Paints, Dabur, HCL Tech, Zeel, Bharti Infratel, TechM, HDFC Bank, L&T, JSW Steel, Wipro and Infosys but weak in UPL, RIL, Hindalco, Kotak Bank and ICICI Bank.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)