The 50-share index has to continue to hold above 10,777 zones to extend its move towards 10,835 and 10,888, while a drift below 10,740-10,735 zones could drag it towards 10,700 and 10,660.
The Nifty continued to form higher lows for the fourth consecutive session and headed towards 10,816-mark. However, it slipped around 50 points from higher levels, but closed positively in the crucial 10,770 zone.
The decline is being bought, but absence of follow up buying is seen at higher levels.
Now, the 50-share index has to continue to hold above 10,777 zones to extend its move towards 10,835 and 10,888, while a drift below 10,740-10,735 zones could drag it towards 10,700 and 10,660.
On a weekly scale, the index formed an inside bar and a Hammer candle, but at the same time, it is forming lower highs from last three weeks. This indicates overall range-bound bias in the market. The index is making narrowing price behaviour from last three months as participants are looking for a trigger to start the next ride.
The Nifty traded within its trading range of last week and consolidated between 10,600 and 10,820. Supports are slightly shifting higher, but resistances are intact at 10,835, 10,888 and 10,929 to commence the next leg of rally.
In terms of volatility, the India VIX declined in the last week by 3.86% at 12.44 levels while aggregate Put Call Ratio is hovering near to 1.50 mark. This suggests overall bullish bias.
On the option front, maximum Put OI is at 10,600 followed by 10,700 strike, while maximum Call OI is at 10,800 followed by 11,000 strike.
We have seen Put writing at 10,700 and 10,800 strikes while Call writing is seen at 10,800 strike.
Option band signifies an immediate trading range of 10,700-10,835. Shift in higher Put OI base as well lower Call OI base suggests tug of war would continue for next coming sessions. It got stuck in a range and option writers are getting best out of it.
Meanwhile, the Bank Nifty formed a high wave candle on daily scale and finally closed flattish near to 26,500. Now, it has to continue to hold above 26,500 to witness an up move towards 26,750, while a hold below 26,400 could drag it towards 26,250 and 26,100 levels.
The index is stuck between 26,000 and 26,800 zones from last 24 trading sessions and requires a decisive range breakout to start a next leg of rally.
The index could remain rangebound, so short strangle strategy can be used till it doesn’t give a decisive range breakout above 10,888 or below 10,700 zones.
Stock-specific selective heavyweights are holding their grip. M&M, TCS, Maruti, HUL, Kotak Bank, Reliance, Bajaj Finance look strong while volatility could continue in metal stocks.
