Stock Market

F O: RSI, VIX use a lot of relief to the bulls; 8,300 level secret now

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By Chandan TapariaNifty opened on a positive note on Thursday on the back of favourable global cues.

It filled the opening gap due to a marginal fall in opening trades, and then started moving northward.

The index made higher highs and lows for the second consecutive session and continued its winning streak for the third day in a row. If formed a bullish candle on the daily chart and the RSI oscillator came above the 30 mark, which is a sign of relief for the bulls.

However, the benchmark index concluded March derivatives series with a huge loss of 25.72 per cent, making it the worst series since October, 2008. The overall chart structure is still negative, but a pullback from the ongoing corrective phase cannot be ruled out after the sharp decline in last five weeks.

As long as Nifty holds above the 8,300 level, the index may bounce towards the next resistance at 8,888 and then 9,200 levels, while support is now placed at 8,300 and then 8,000 levels. Since it is the beginning of new series, options data lay scattered at various strike prices.

On the options front, maximum Call open interest was at 9,000 and then 10,000 levels, while maximum Put OI was at 7,500 and then 8,000 levels.

There was Call writing at 9,000 followed by 10,000 levels, while Put writing was seen at 8,000 followed by 8,500 levels.

Options data indicated a wider trading range between 7,700 and 9,200 levels. India VIX fell 8.40 per cent to71.10 level.

It has corrected by almost 15% from its recent swing high 86.63 and also negated the formation of higher lows after 12 sessions, which indicates some short-term relief to the bulls for a bounceback move. Bank Nifty continued its outperformance against the benchmark index for the second consecutive session and rallied over 6%.

Overall, Bank Nifty has corrected 35 per cent in March series, which is the biggest-ever fall on an expiry-to-expiry basis.

It made higher highs and lows for the second session and formed a bullish candle on the daily chart. The RSI oscillator is also rebounding from the oversold territory, and thus, we may see a further bounceback.

However, a higher degree chart structure is still under pressure and this bounce is just a pullback move of a broader correction.

Now, Bank Nifty has to hold above 18,500 level to witness a bounce towards 20,500 and then 21,000 levels, while support can be seen at 18,300 and then 17,000 levels. Market breadth remained in favour of the advancing counters for the second consecutive session, which is a sign of relief for the bulls.

The buying momentum was seen across the Street as all sectoral indices closed in the green.

Among them, Realty, Banking and FMCG indices were major gainers of the day. (Chandan Taparia is Technical - Derivative Analyst at MOFSL.

Investors are advised to consult financial advisers before taking an investment calls based on these observations)




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Category: Stock Market


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