market analysis: F&O: Bullish momentum intact; but volatility index is rising too

Nifty opened with gap up on Wednesday, continued the winning streak for the third consecutive session and touched yet another lifetime high of 14,868. The second half of the session saw some consolidation and the index finally closed with a gain of around 140 points. It made a bullish candle on the daily scale and continued to form higher highs and lows for the third session in a row. Now Nifty has to hold above 14,600 level to continue its bullish momentum towards 14,850 and then 15,000 levels, while support can be seen around 14,500 and then 14,400 levels.

India VIX rose 1.74% from 23.34 to 23.74 levels. Now, it needs to cool down and hold below 20 level for a continuation in the ongoing momentum.

On the options front, maximum Put open interest stood at 14,000 level followed by 13,500, while maximum Call OI was seen at 15,000 followed by 16,000 levels. The market witnessed noticeable Put writing at 14,000 and 14,500 levels and some Call writing at 16,000 and 15,500 levels, but there was unwinding at strike price 14,500. Options data suggested a wider trading range between 14,400 and 15,200 levels.

Bank Nifty opened with a gap up and continued its northward journey to touch 34,908 level. Banking stocks soared higher and held the rate-sensitive index at higher levels. It closed with a gain of around 500 points and formed a bullish candle on daily scale with longer lower shadow, indicating that the bulls are in full form. It is forming higher tops and bottoms since the last four sessions. Now, it has to hold the 34,500 level to witness a bounce towards 35,000 and 35,500 levels, while on the downside support exists at 34,000 and 33,500 levels.

Nifty futures closed positive at 14,817 level with 0.83% gains. Among specific stocks, the trade setup looked bullish in Shriram Transport,

, Chola Finance, BEL, Escorts, TVS Motor, IOC, Cipla, Bank of Baroda, Sun Pharma, Hero MotoCorp, M&M, Axis Bank, and but weak in Marico, Sun TV, Pidilite Industries, Maruti and Colgate-Palmolive.

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