By Chandan TapariaThe Nifty50 index continued to face selling pressure for the second session after the recent breakdown from consolidation phase to slip below 10,700.The index formed a bearish candle on the daily scale, followed by Bearish Belt Hold pattern.
It has been making lower highs and lower lows for last three sessions and has slipped below its 50-day EMA.As long as Nifty sustains below 10,660, the index may weaken further towards 10,550 and then 10,420 levels, while on the upside, hurdles are seen at 10,660 and then 10,700 levels.On the options front, open interest was scattered across different strike prices at the start of July series.
Maximum Put open interest was at strike price 10,600 followed by 10,500 while maximum Call OI was at 11,000 followed by 10,800.Options data suggested limited upside while downside support is yet to be established in the absence of meaningful open interest inventory at the beginning of a new series.India VIX moved up 3.24 per cent to 13.95 level.
The spurt in VIX indicates that the bears have a grip on the market and there was selling pressure even in the heavyweight stocks in line with the weakness in global markets.Bank Nifty continued to face selling pressure and has been making lower highs and lower lows for last three sessions.
It has formed an engulfing pattern on the weekly scale, which signalled limited upside.
As long as Nifty remains below 26,500, it could drift towards 26,100 and then 25,950 levels, while on the upside, major hurdles are seen at 26,500 and then 26,750 levels.Nifty futures closed in the negative with a loss of 0.89 per cent at 10,671.
Long buildup was seen in Godrej Consumer Properties, NTPC, Bharti Airtel, Britannia and MM while shorts were seen in PowerGrid, PFC, Ambuja Cement, Federal Bank, ONGC, REC, Colgate-Palmolive, Siemens, Havells and Bank of Baroda.(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)