Home Market F&O: Call writing at 10,600 may restrict further advance in Nifty

F&O: Call writing at 10,600 may restrict further advance in Nifty


By Chandan Taparia

The Nifty50 index opened in the positive and made a new lifetime high at 10,566 level on Friday. It formed a bullish candle with a runaway gap and saw a breakout from its Pole and Flag pattern.

It closed in the positive with a gain of around 50 points and saw the highest daily close. Now, the index needs to hold above 10,500 to extend its move towards 10,600 and 10,650 levels, while on the downside, supports are seen at 10,450 level.

On the option front, maximum Put open interest stood at 10,400 followed 10,300 and 10,500 while maximum Call OI was at 11,000 followed by 10,600. Fresh and significant Put writing was seen at strike price 10,500, which shifted its support, while fresh Call writing at 10,600 could restrict Nifty's immediate move to 10,600 and 10,650 levels.

The option band signified a shift in support to 10,450 and 10,500 levels, as this strike price has fresh Put OI congestion.

India VIX fell 2.29 per cent to 13.11. It has to hold below 13-12.50 levels to support a fresh leg of rally with a smooth ride in the market.

Bank Nifty continues its upmove and headed towards 25,650 level. It has been underperforming the Nifty50 index, but respected its 50 DEMA. Now, it has to sustain above 25,650 to see a fresh breakout towards 25,750 and then 25,950 levels, while on downside, supports are seen at 25,400 and then 25,250 levels.

Nifty futures closed in the positive with a 0.49 per cent gain at 10,578. Long buildup was seen in UBL, Reliance Communications, Adani Ports, Apollo Tyre, Just Dial, Castrol India, Bharat Forge, Idea, IndusInd Bank, Ajanta Pharma, Titan, Amar Raja Battery, Siemens and Asian Paint, while shorts were seen in Arvind, ICICI Bank, BPCL and Infosys.

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

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