Nifty Futures witness short build-up; India VIX jumps 11 per cent!

Nifty opened on a flat to negative note on Thursday. Thereafter, it made an attempt to move higher, and gradually, went on to make a high of 15,885.75. However, selling pressure emerged around these levels, and thereafter, the index remained under selling pressure throughout the day and hit a low of 15,682.90. In the end, Nifty settled with a loss of 151 points at 15,727, which is the worst fall witnessed after April 30. The volatility index i.e., India VIX jumped more than 11 per cent.      

The price action of the day formed a sizeable bearish candle, carrying lower high & lower low. The index has breached its 20-DMA support as well, which is an ominous sign. Interestingly, about 5.85 per cent of open interest addition was seen in Nifty July Futures while a theoretical rise in the open interest with a decrease in prices, indicates a short build-up.    

On Thursday, it was for the sixth time that Nifty tested the zone of 15,880-15,915 in the last one month. Historically, the repeated testing of supports & resistances more than six times is quite rare in any timeframe. If such a situation occurs, then the only way by which this resistance or support is crossed is through a gap!    

Going ahead, the prior week low of 15,635 is likely to act as an important support level for Nifty in the near term. A close below the level of 15,635 shall eventually pave the way for a retest of the recent corrective low of around 15,450 levels. On the upside, a decisive close above the level of 15,915 would further provide strength to the bulls.    

On Friday, markets would first react to the IT bellwether-TCS number in the early trade, which might set the tone for the rest of the earnings session as well.