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F&O: What do OI positions in Calls and Puts tell about Nifty trade setup


By Chandan Taparia

The Nifty50 index managed to hold its support near the 10,950 level and recovered to 11,030 on Friday. It recently broke out above 10,929 and sustained buying interest has been visible at crucial support levels for last five sessions.

The index formed a small bullish candle on the daily chart and a Long-Legged Doji on the weekly scale, which indicates that every decline is being bought into.

Now, the Nifty has to hold above 10,950 to extend its gains towards 11,080 and then 11,171 levels, while on the downside, supports are seen at 10,929 and 10,925 levels.

The index has got stuck between 10,923 and 11,078 levels for last eight sessions and requires a range breakout to commence the next leg of the rally.

The index closed flat on a weekly basis with a Doji candle, which indicated a tug of war, even as every decline is getting bought into.

On the options front, maximum Put open interest was at 11,000 followed by 10,900 while maximum Call OI was at 11,100 followed by 11,000. Meaningful Put writing was seen at 10,900 followed by 11,000, whereas Call unwinding was seen at all the immediate strike prices. The option band signified an immediate trading range between 10,929 and 11,080 levels.

India VIX fell 1.10 per cent to 13.44. The VIX has to cool down to start the fresh leg of rally to head towards its lifetime high.

The Bank Nifty remained rangebound between 26,700 and 26,950 levels for most part of the session. It is facing a hurdle near 27,000 level, while major support exists near 26,650 level. The index has to hold above 26,750 to witness an upward move towards 27,000 and then 27,165 level, while on declines, major support is likely at 26,650, 26,400 and lower levels.

Nifty futures ended in the positive at 11030 level with a 0.52 per cent gain. Long buildup was seen in Bajaj Finance, Havells, CEAT, IGL, Apollo Tyre, ICICI Bank and Voltas, while shorts were seen in Bajaj Auto, Apollo Hospital, Hero MotoCorp, Hindalco and UBL.

(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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