As trade seems to be sideways, Mazhar Mohammad of Chartviewindia.in advises traders to remain neutral on the index.
The Nifty50 traded higher for the
third consecutive day but remained in consolidative mode on October 20, with
profit-booking at higher levels in the last couple of hours of trade forcing
the index off the day's high.
After opening lower at 11,861,
the Nifty immediately gained strength to hit an intraday high of
11,949.25. It saw some profit-booking at higher levels in the last hours and
ended the day at 11,896.80, up 23.80 points.
The index failed to hold on to
11,900-mark and formed a small-bodied bullish candle that resembled a Shooting
Star kind of pattern on the daily charts.
A 'Shooting Star' pattern is
formed when the index comes under selling pressure as traders start booking
profits at higher levels. The pattern is usually formed in an uptrend and is
treated as a reversal pattern, which requires confirmation that the trend will
get reversed in the near future.
A strong uptrend is unlikely in
the coming days unless the index closes above 12,025, experts said.
As trade seems to be sideways,
traders should remain neutral on the index, Mazhar Mohammad, Chief Strategist –
Technical Research & Trading Advisory at Chartviewindia.in told
Moneycontrol.
"Despite positive price
action for the day, Nifty50 appears to have witnessed intraday profit booking
from the exact resistance point of 11,950 levels, which depicted a Shooting
Star kind of formation with long upper shadow but with relatively lower candle
body," Mohammad said.
Hence, he feels in the next
trading session if the index slips below 11,837 then it can attract intraday
selling pressure and can make an attempt to bridge the bullish gap present
between 11,820 – 11,789 levels registered on October 19.
Contrary to this if the bulls
manage to defend 11,837, then the trade for the next session can be sideways
with positive bias with the likelihood of retesting the recent corrective swing
high of 12,025 levels, according to him.
However, the current rally from
the lows of 11,661 is still looking like a counter-trend move and hence
outright bullish opinion shall not be formed unless the Nifty registers a
strong close above 12,025 levels, he said.
India VIX moved up by 3.99
percent from 21.82 to 22.69 levels. Chandan Taparia of Motilal Oswal feels VIX
needs to cool down below 19 zones for market stability but volatility could
spike ahead of US elections.
On the options 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. Call writing was seen at
12,000 then 12,500 strike while Put writing was seen at 11,500 then 11,600
strike.
The abovementioned option data
indicated an immediate trading range for the Nifty at 11,750 to 12,000 levels.
The Bank Nifty opened negative at
24,117.35 but managed to hold 24,000- mark and headed higher to hit an intraday
high of 24,410.90.
The index has been making higher
lows on the weekly scale and holding well above the previous hurdle of
24,000-24,200. It closed 45.05 points higher at 24,311.80 and formed a bullish
candle on the daily scale.
"The index has been making
higher highs-higher lows from the last three trading sessions. Now it has to
hold above 24,000 to witness an upmove towards 24,750 then 25,000 while on the
downside support exists at 23,750 then 23,500," Chandan Taparia, Vice
President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Positive setup was seen in Asian
Paints, Dabur, HCL Technologies, Zee Entertainment, Bharti Infratel, Tech
Mahindra, HDFC Bank, L&T, JSW Steel, Wipro and Infosys while weakness was
seen in UPL, Reliance Industries, Hindalco, Kotak Mahindra Bank and ICICI Bank,
he added.
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