F&O: Nifty50 poised to go higher, low volatility helping buy on dips

Nifty on Friday opened positive and after a slight dullness in the initial tick, it soared higher to touch a new lifetime high of 16,722. It built strength throughout the day and saw its highest-ever daily close of 16,705 with a gain of 68 points. It formed a bullish candle on the daily scale with a long lower shadow as it continued to make higher highs and lows for the last four weeks. Now it has to continue to hold above the 16,700 level to extend the move towards a new life time high territory of 16,800 and 17,000, while on the downside support is seen at 16,500 and 16,380 levels.

India VIX fell 1 per cent from 13.54 to 13.40 level. A cooldown in volatility from the recent swing high has given a ‘buy on decline’ stance to the market and now VIX needs to hold below 12 level to get more buying interest in the broader market.

Since it is the beginning of the new series, Option data lay scattered at various strike prices. Maximum Put OI stood at 16,000 level followed by 15,000, while maximum Call OI was seen at 16,500 followed by 17,000. Options data suggested a broader trading range between 16,000 and 17,000 levels while an immediate trading range in between 16,500 and 17,000 levels.

Bank Nifty opened negative, but picked up pace thereafter and moved in a consolidative manner in the entire session. It breached its previous day’s low levels but managed to close flat above the 35,600 level. It formed a small-bodied bullish candle on the daily and weekly scales. Now it has to hold above 35,500 level to witness a rise towards 35,800 and 36,000 levels while on the downside support are seen at 35,300 and then 35,000 levels.

Nifty futures closed positive with a gain of 0.39 per cent at 16,712 level. Among specific stocks, the trade setup looked bullish in National Aluminium Company, Mindtree, SRF, ICICI Lombard, UltraTech Cement, ACC, Hindalco, Torrent Power, Ambuja Cement, LT, Mcdowell, Indigo, Cipla, Divis Labs, TCS and Bata India but weak in Indusind Bank, Canara Bank and Manappuram.

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