By Chandan TapariaThe Nifty50 index managed to hold its support at the 10,700 level and headed towards a fresh weekly high of 10,837 on Friday.
It formed a Bullish Engulfing pattern on the daily scale, as it covered all the losses of last session and closed above 10,800.The index visited the entire trading range of the week in just one session, led by strong momentum in last hour of trade.
On the weekly chart, the index formed a Doji candle similar to the Bullish Pin Bar, as it closed near its weekly open with a long lower shadow.Pattern analysis suggests the decline got bought into and now Nifty has to continue to hold above 10,770 and 10,835 levels to extend its move towards 10,888 and then 10,929 levels, while on the downside, the 10,700 level is likely to act as a major support.On the options front, maximum Put open interest was at strike price 10,700 followed by 10,600 while maximum Call OI was at 11,000 followed by 10,900.
There was significant Put writing at 10,700 and 10,800 levels, while Call unwinding was seen at all immediate strike prices.
Options data suggested a shift in trading range between 10,750 and 10,920 levels.India VIX fell 3.43 per cent to 12.02 level.Bank Nifty witnessed strong momentum in last hour of the session and saw a highest close in 14 sessions above its multiple hurdle at 26,750.
It formed a strong Bullish candle and needs to hold above 26,750 to extend its move towards 27,000 and then 27,150 27,200 zone, while supports are seen at 26,250 level.Nifty futures closed in the positive with a gain of 0.93 per cent at 10,837.
Long buildup was seen in MRF, JSW Steel, HDFC, CEAT, Jet Airways, Bajaj Finance, Indiabulls Housing Finance, MM, Cipla and SBI while shorts were seen in SRF, Sun TV, Coal India, Motherson Sumi and Cummins India.(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)