Nifty opened with a gap up on Monday, but failed to surpass the 11,900 level and remained consolidative in a range of 70 points for most part of the day. It formed a Doji candle with a long lower shadow on the daily scale, which indicated that declines are being bought into, but multiple hurdles were intact at higher levels.
The index closed the day with a decent gain of 110 points and continued its winning streak into the second consecutive session. Overall, the price and data setup suggested that a bounce may be seen, but multiple hurdles and supply pressure at higher levels may restrict the upside momentum.
Now, Nifty has to hold above the 11,800-11,820 zone to witness a bounce towards 12,000 level, while on the downside support exists at 11,750 and then 11,666 levels.
India VIX moved up 0.82 per cent from 21.64 to 21.81 levels. It needs to cool down below 19 level for the market to stabilise, but volatility could rise ahead of the US elections.
On the options front, maximum Put open interest stood at 10,500 level followed by 11,000, while maximum Call OI stood at 12,000 followed by 12,500 levels. There was Call writing at strike prices 12,200 and 12,000 and Put writing at 11,700 and 11,500 levels. Options data suggested a wider trading range between 11,500 and 12,000 levels, and an immediate trading range between 11,700 and 12,000.
Bank Nifty opened with a gap up and witnessed sustain buying interest throughout the day as it headed towards 24,300 level. The index formed a bullish candle outperforming Nifty and closed the day with a gain of more than 700 points. It has seen a decisive range breakout with a hold above the 24,000-24,200 zone. It is making higher lows since last two sessions. Now it has to hold above 24,000 level to witness a bounce towards 24,500 level and then the 24,750-25,000 zone. On the downside, support exists at 23,750 and then 23,500 levels.
Nifty futures closed positive at 11,895 level with 1.11 per cent gain. The trade setup looked positive in ICICI Bank, Axis Bank, SBI, Pidilite Industries, HDFC, Colgate Palmolive, Concor, Muthoot Finance, Kotak Bank, IndiGo, Cummins India, IndiGo and Havells but weak in Jubilant Foodworks, Bajaj Auto, Sun TV, Bharti Airtel, M&M and ZEEL.
(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)