By Chandan TapariaThe Nifty50 failed to hold on to its previous sessions gains on Tuesday and drifted towards 10,865 level.
However, index recovered from low point of day to close with a loss of 40 points.Since past nine weeks, Nifty has been struggling to surpass 10,985 level and absence of follow-up buying has taken index lower.On Tuesday, index formed a bearish candle with long lower shadow, which indicated that only declines were being bought into.Now, index has to hold above 10,850 level to witness an up move towards 10,985 and then 11,080, while on downside supports exist at 10,850 followed by 10,777 levels.On options front, maximum Put open interest was at 10,700 followed by 10,500 strike, while maximum Call OI was at 11,000 followed by 11,200 strike.Marginal Put unwinding was seen at most of immediate strikes, while Call writing was at 11,000 and 11,200 strikes.
Option band signifies a trading range between 10,750 and 11,080 levels.India VIX fell down by 0.91 per cent to 17.98 level.
Volatility has to cool down below 16 to get a decisive range breakout.Nifty Bank has been moving in a narrow trading range of 27,350 to 27,600 levels from last five sessions.
The index has got stuck in a range and required a decisive range breakout to witness a fresh leg of rally.
Now, it has to hold above 27,350 to witness an up move towards 27,750 and then 28,000 level, while immediate support exists at 27,250-27,150 zone.Nifty futures closed with a loss of 0.37 per cent at 10,929.
Built-up of long positions were seen in Havells, TVS Motors, Godrej Consumer Products, Kotak Mahindra Bank, Strides Pharma Science, Petronet and NIIT Tech, while shorts were seen in Apollo Hospital, Hindustan Zinc, Jubilant FoodWorks, Asian Paints, ICICI Prudential Life Insurance and MM.(Chandan Taparia is Technical Derivative Analyst at MOFSL.
Investors are advised to consult financial advisers before taking an investment calls based on these observations)