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F&O: High volatility level, Put writing at 10,500 bearish signs

By Chandan Taparia

The Nifty50 index on Wednesday opened in the negative in line with the weakness ..

By admin , in Markets , at November 21, 2018

By Chandan Taparia

The Nifty50 index on Wednesday opened in the negative in line with the weakness in global markets and fell towards the 10,550 mark. However, buying interest emerged at lower levels but the index formed a bearish candle on the daily scale for the second consecutive session.

The 50-pack slipped below its 50-day EMA and traded below its crucially important 10,650 mark, which was also the trend line that connects its recent swing lows of 10,020, 10,105, 10,440 and 10,650 levels. Now, the index has to respect the 10,550 level to witness a bounce towards 10,650 and then 10,700 levels, while on the downside support exists in the 10,500-10,450 zone.

On the options front, maximum Put open interest was at 10,000 followed by 10,500 while maximum Call OI was at 10,700 followed by 11,000.

Meaningful Call writing was seen at 10,700 followed by 10,600 levels, whereas minor Put unwinding was seen at all immediate strike prices. The options band signified a broader trading range between 10,500 and 10,750 levels.

India VIX moved 1.19 per cent higher to 19.55 level. Volatility is not cooling down and is stuck in range. VIX has to cool down below 17-16 zone to get the next leg of smooth upside rally in the market.

Bank Nifty managed to hold its previous days low and relatively outperformed the benchmark index. It formed a Bullish Engulfing body on the daily scale, as buying emerged near its crucial support in the 26,000-26,100 zone. Now it has to hold above 26,100 to witness an upward move towards 26,500 and then 26,650 levels while on the downside support is seen in the 25,800-25,750 zone.

Nifty futures closed in the negative at 10,626 with a loss of 0.42 per cent. Long buildup was seen at BPCL, Dalmia Bharat, IOC, MRF, LIC Housing Finance, Federal Bank, UPL and ACC while shorts were seen in NIIT Tech, OIL, Tata Steel, Infosys and Vedanta.

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