F&O: Call writing at strike 10,200 restricts Nifty’s upside momentum

On the upside, a decisive move above 10,138 could commence the next leg of rally. NSEBSEWockhardtLoading data…

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                              ChartsValuation & Peer ComparisonCommunity BuzzPEER COMPANIESSun PharmaPidilite IndustriesM&MLupinJubilant FoodWorksJSW EnergyITCIOCHPCLHexawareBPCLEXPAND TO VIEW ALL By Chandan Taparia

                              The Nifty50 index on Wednesday failed to surpass its lifetime high of 10,138 and witnessed a decline of 50 points from its intraday high of 10,131. In the process, the index formed a ‘Spinning Top’ candle on the daily chart as it took breather after the rally in last four sessions. The index closed the day with the loss of around 13 points, but made higher highs and higher lows from the third consecutive session.

                              The broader market trend remained positive. If it sustains below 10,050, only then profit booking could be seen in the 10,000-9,980 zone. On the upside, a decisive move above 10,138 could commence the next leg of rally towards 10,200 and then 10,350 levels.

                              On the options front, maximum Put open interest stood at 9,900 followed by 10,000, while maximum Call OI was at 10,200 followed by 10,100. Fresh Put writing was seen at strike price 10,100, while Call writing was witnessed at 10,100 and 10,300. Put writing remained intact at 10,100 and it is likely to hold the market, while Call writing at strike price 10,200 restricted the upside momentum.

                              It seems the tug of war between Call and Put writers would continue for the next few hours to get a fresh leg of rally.

                              India VIX fell marginally by 0.04 per cent to 11.75 and a lower VIX is holding the market even on declines.

                              Bank Nifty headed towards 24,950 level but closed with a marginal gain of around 0.20 per cent. Now, if it holds above 24,650, the Nifty50 could extend its upward move towards 25,000-25,100 zone, while on the downside support exists at 24,500 level. There major Put writing at 24,600 and 24,700 levels on Bank Nifty while maximum Call open interest stood at 25,000, which can restrict the upside movement.

                              Nifty futures closed with a marginal loss of 0.11 per cent at 10,096. Long buildup was on the counters of in JSW Energy, Hexaware, Marico, Tata Power, Divi’s Lab, Wockhardt Pharma, Bank India, Lupin, Orient Bank, Syndicate Bank and Sun Pharma, while shorts were build in Jubilant Foodworks, BPCL, Amar Raja Battery, Pidilite Industries, M&M Finance, ITC, IOC, HPCL and Indiabulls Housing.

                              (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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