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F&O: Buy on dips holds up Nifty; trading range at 17,000-17,800

Nifty index opened flat to positive om Wednesday and remained slightly dull in the first half of the session. It failed to hold the 17,350 level and drifted towards 17,250, but picked up during the next half to close on a flat note. The index breached its previous day’s low, but buying interest on declines helped it to close above the 17,350 level.

The index formed a Hammer kind of candle on the daily scale with a long lower shadow, indicating buying interest was intact on any declines. Now it has to hold above the 17,300 level to extend the move towards 17,500 and 17,777 levels, while on the downside, support was seen at 17,200 and 17,050 levels.

India VIX fell 3.29 per cent from 14.89 to 14.41 level. It needs to hold below 13 level for the the bullish momentum to continue.

On the options front, maximum Put Open Interest was seen at the 17,000 level followed by 16,500, while maximum Call OI stood at 17,500 followed by 17,400 levels. Call writing was seen at strike prices 17,300 and then 17,400, while there was Put writing at 17,000 and then 16,900 levels. Options data suggested a broader trading range between 17,000 and 17,800 levels and an immediate trading range between 17,200 and 17,500 levels.

Bank Nifty opened positive and the momentum in the banking stocks pulled the index towards the 36,850 level. It outperformed the broader market and closed near the day’s high with a gain of around 300 points. The index formed a bullish candle on the daily scale and recovered the losses of the previous session. Now it has to hold above 36,750 level to witness a bounce towards 37,000 and 37,250 levels, while on the downside, support was seen at 36,500 and then 36,250 levels.

Nifty futures closed flat to positive with a gain of 0.06 per cent at 17,386 level. Among specific stocks, the trade setup looked bullish in Naukri, HDFC AMC, NAM India, Rec Ltd, PFC, IEX, Canfin Homes, Trent, India Mart, Tata Power, ICICI Pru, Concor, Grasim, ICICI Pru, Voltas, Coal India, HDFC Life and Titan but weak in Divi’s Lab, Apollo Tyre, SBI Life, Maruti, Glenmark and Bajaj Auto.

(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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