F&O Manual | Nifty trades in a range in volatile market; Straddle position at 19,700

The benchmark indices continued to put up lacklustre trading, with both the bank and IT indices down 0.4 percent, while the auto, metal, capital goods, and power indices were up 0.5 percent each by 1pm on September 26.

“The markets started the week on a muted note and ended unchanged, taking a breather after the recent slide. On the benchmarks front, the Nifty oscillated within a range. Mixed trends on the sectoral front kept the traders occupied, with realty and financials edging higher, while IT and pharma ended in the red. It is a normal pause, and we may see some rebound due to oversold positions. However, the upside seems capped, citing a strong hurdle around the 19,800-19,900 zone,” Ajit Mishra, SVP – Technical Research at Religare Broking Ltd, said.

At 1pm, the Sensex was down 141.19 points or 0.21 percent at 65,882.50, and the Nifty fell 32.50 points or 0.17 percent to 19,642. About 1,570 shares advanced, 1,497 declined, and 87 shares traded unchanged.

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

As per options data, a tussle of call and put writers can be seen at the 19,700 strike. “For an intermediate bullish trend to hold, the Nifty has to sustain above the crucial support of 19,550. Any level below 19,550 could intensify the selling pressure which could drag the Nifty towards the next support of 19,300. It is advisable to hold long positions with a strict stop loss at 19,550 in Nifty spot. On the higher side, the 19,800-19,850 band could offer a resistance in the Nifty,” said Vinay Rajani, CMT, senior technical and derivative analyst at HDFC Securities.

Rajani expects PSU bank, Fertilizers and Sugar sectors to outperform the market in the short term.

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Among individual stocks, Divislab, Lalpathlab and Dr Reddy saw a long build-up, while Glenmark, Biocon and Auropharm saw a bearish set-up.

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