By Chandan TapariaThe Nifty50 index opened in the negative and continued to face selling pressure towards the 10,700 level.
It formed a Bearish Belt Hold pattern on the daily scale and broke its immediate support at 10,750 and 10,720 levels.
It has seen a breakdown from its narrow range 7 (NR7) pattern and closed near the support of its rising channel on the daily chart by connecting the recent swing lows of 10,417 and 10,550 levels.Now, if it sustains below 10,750 level, then profit booking could continue towards 10,660 and then 10,620 levels, while on the upside, hurdles are seen at 10,770 and then 10,835 levels.On the options front, maximum Put open interest stood at strike prices 10,700 and 10,600 while maximum Call OI was at 11,000 followed by 10,800.
There was Put unwinding at all immediate strike prices while significant Call writing was seen at 10,800 and 11,000 levels.
Options data suggests a shift in lower trading range between 10,650 and 10,800 levels.India VIX moved up 4.66 per cent to 12.96 level.
A decline in put-call ratio with a rise in volatility from lower levels is now restricting the upside momentum.Bank Nifty continued the formation of lower highs and lower lows for last four sessions.
It formed a bearish candle on daily scale and resistance was gradually shifting lower.
Now as long as it does not negate this formation and holds below 26,500 level, then weakness could be seen towards 26,100 and then 25,950 levels, while on the upside, hurdles exist near 26,500 and 26,750 levels.Nifty futures closed in the negative with the loss of 0.63 per cent at 10,722.
Long buildup was seen in KSCL, Tata Elxsi, JP Associates, Cummins India, HDFC, GAIL and Glenmark while shorts were seen in Bank of India, India Cement, IGL, Ajanta Pharma, Andhra Bank, BPCL, Sun TV and UPL.(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)