Mazhar Mohammad of Chartviewindia.in advised traders to wait for a breakout in either of the directions and should go long if index trades above 12,000 levels.
The Nifty50 remained rangebound throughout the session on October 13 and closed flat amid lower-than-expected fiscal stimulus and better quarterly earnings.
The index formed Doji kind of pattern on the daily charts, for the second consecutive session today as closing was near opening levels. A Doji candle indicates there is some indecisiveness among the bulls and the bears and bounces were being sold in the absence of follow-up buying interest.
At this juncture, as index seems to be in no trade zone, Mazhar Mohammad of Chartviewindia.in advised traders to wait for a breakout in either of the directions and should go long if index trades above 12,000 levels whereas intraday shorting should be considered below 11,867 for a modest target of 11,800.
The Nifty50 opened flat at 11,934.65 and remained in a 100 points range. It touched an intraday high of 11,988.20 and low of 11,888.90, before closing 3.5 points higher at 11,934.50.
India VIX was down by 1.96 percent from 21.12 to 20.71 levels.
"Doji candle formation on Nifty50 for two consecutive days, with narrow range of trading between 100 points, is suggesting that momentum may be slowly fizzling out among the bulls," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
Hence, he feels in next trading session if Nifty slips and settles below 11,867 levels then it can witness profit booking, and a close below 5-day exponential moving average, whose value is placed around 11,845, can also set the tone for a corrective down swing.
Contrary to these expectations, if bulls manage to push the index beyond 12,000 levels on closing basis then the upward swing can get extended towards 12,200 levels, according to him.
On option front, maximum Put open interest was at 10,500 followed by 11,000 strike, while maximum Call open interest was at 12,500 followed by 12,000 strike. Marginal Call writing was seen in 12,500 and 12,300 strike while Put writing was seen at 11,600 then 11,900 strike.
The abovementioned option data indicated that an immediate trading range for Nifty could be 11,700 to 12,100 levels.
Bank Nifty opened lower at 23,663.05 and remained under pressure for most part of the session to hit an intraday low of 23,431.50.
The index negated the formation of higher high - higher lows of last seven trading sessions and closed in negative mood for second consecutive session. It fell 220.60 points to 23,492.20 and formed a bearish candle on daily scale.
Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol that Bank Nifty has to hold above 23,500 to witness an upmove towards 24,200 then 24,500 while on the downside key support exists at 23,200 then 23,000 levels.
He said positive setup was seen in HCL Technologies, Tata Chemicals, Infosys, Reliance Industries, Mindtree, Kotak Mahindra Bank, Ambuja Cements and Tech Mahindra while weakness was seen in LIC Housing Finance, Zee Entertainment, M&M Financial, Bosch, RBL Bank, Siemens and MGL.
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