F&O Manual | Traders stack up neutral trades at 19,400 levels, heavy short build-up in pharma

The benchmark indices began the day on a flat note, taking cues from mixed Asian bourses and subdued US indices. But the indices gradually gained momentum and levitated to the 19,400 subzone. Except pharma and information technology, all other sectoral indices traded in the green around noon.

At 12 noon, the Sensex was up 109.79 points or 0.17 percent at 65,325.88, and the Nifty was up 37.10 points or 0.19 percent at 19,430.70. About 2,098 shares advanced, 976 shares declined, and 106 shares unchanged.

Bars reflect changes in open interest (OI) during the day. The red bars show call option OI and the green put option OI.

According to options data, the Nifty struggled at 19,400 with heavy call and put writing activity. The level of 19,300 and 19,150 on the downside will act as a strong support for the index, while a close above 19,426 can lead to initiation of fresh longs, analysts said.

Technically, there have been no significant changes in the chart structure as the index stayed within the consolidation zone of 20 DEMA and 50 DEMA. “The broad-based buying emergence has certainly uplifted the broader sentiment. Also, the resilience of not giving up easily on the technical support zone strikes the significance of a bullish undertone,” said Osho Krishan, Senior Analyst for Technical and Derivative Research at Angel One Ltd.

“On the levels front, 19,300-19,250 (50 DEMA) withhold the strong support zone, followed by the bullish gap at 19,230-19,200 in the comparable period. While on the higher end, 19,480-19,500 remains the daunting task for the bulls and a decisive breakthrough could only affirm some momentum in the index to set up near term trajectory,” he added.

Analysts advise that the global bourses are to be watched closely for the immediate trend setup while focusing on selective stock-centric moves for an outperformance.

Among individual stocks, TataComm, HDFC AMC and Idea saw a bullish set-up, while pharma stocks Zydus, Glenmark and Auropharma saw a short build-up.

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