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By Chandan Taparia The Nifty50 index opened negative on Tuesday but managed to hold near the 10,450 mark and headed towards the 10,600 level.
It recovered most of its losses of last trading session and formed a Piercing Line pattern on the daily scale, which indicated that the bulls are not loosening their grip.
The index has been consolidating between 10,450 and 10,650 levels and it would require a decisive range breakout for Nifty to commence the next leg of rally.
The index has taken support at the lower band of the trading range and now needs to hold above 10,550 to witness an upward move towards 10,650 and then a fresh move towards 10,750 level.
On the downside, the index has immediate support at 10,500 and then 10,450 levels.
On the options front, maximum Put open interest was at 10,000 followed by 10,200, while maximum Call OI was at 11,000 followed by 10,800.
There was Put writing at 10,200 and 10,400 while Call unwinding was seen at all immediate strike prices.
The option band signified an immediate trading range between 10,450 and 10,700 levels.
India VIX fell 3.48 per cent to 18.70.
VIX has to cool down below 16 mark to get the next leg of smooth upside rally in the market.
Bank Nifty opened in the negative but recovered sharply from lower levels and extended its gains towards the 25,800 mark.
It formed a bullish candle on the daily scale which suggests buying in the crucial support zone between 25,400 and 25,500 levels.
Now, the index has to hold above 25,500 to extend its march towards 25,900 and then 26,250 levels, while on the downside, support was seen in the 25,500-25,400 zone.
Nifty futures closed positive at 10,608 with a gain of 0.99 per cent.
Long buildup was seen in Godrej Industries, CEAT, SRF, UBL and Eicher Motor while shorts were seen in Bank India, Sun Pharma, Oil India, IGL, NIIT Tech and Tata Elxsi.
(Chandan Taparia is Technical Derivative Analyst at MOFSL.
Investors are advised to consult financial advisers before taking an investment calls based on these observations)
