F&O: India VIX hits lowest point in 2021 to signal the bulls are ready to charge

Nifty opened with a gap up above 14,750 level on Monday and moved in the northward direction throughout the session. It snapped the losses of last three sessions and closed near the day’s high with a handsome intraday gain of around 250 points. Technically, the index has formed a healthy bullish candle on the daily scale and negated the formation of lower highs and lows of the last three sessions.

Now, it has to hold above 14,900 level to witness a bounce towards 15,050 and then 15,150 levels, while on the downside support exists at 14,700 and 14,600 levels.

India VIX fell 3.27% from 20.26 to 19.60 level. India VIX is at the lowest level of the 2021, as it has recorded the lowest close of last 87 sessions since January 1, 2021.

On the options front, maximum Put open interest stood at 14,000 level followed by 13,500, while maximum Call OI was seen at 15,000 level followed by 14,800. There was Call writing at strike prices 15,300 and 15,400 with Call unwinding was seen at 15,000. Put writing was seen at strike prices 14,800 and 14,700. Options data suggested a shift higher in wider trading range in between 14,600 and 15,200 levels.

Bank Nifty opened with a gap up and moved above 33,500 level during the session. The bulls ruled the banking stocks and the index saw its highest daily close in 10 sessions. The index surpassed the previous hurdle, and looked set to cross a falling supply trend line as it sustained at higher levels. The index outperformed the broader market and closed the session with a massive gain of around 4%. It formed a strong bullish candle and negated the formation of lower top and bottom of last three sessions. Now it has to hold above 33,333 level to witness a bounce towards 34,000 and 34,250 levels, while support on the downside was seen at 33,000 and 32,750 levels.

Nifty futures closed positive at 14,956 level with 1.64% gain. Among specific stocks, the trade setup looked bullish in

, IndusInd Bank, SBI, BHEL, RBL Bank, Motherson Sumi, Shriram Transport, ICICI Bank, , Siemens, HDFC Bank, UPL, UltraTech Cement, Bajaj Finserv, Bajaj Finance, and LIC Housing Finance but weak in Cipla, L&T, Cadila and HPCL.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)