The index is likely to remain choppy or consolidate further ahead of the Reserve Bank of India’s 2-days policy meet.
The Nifty50 which started with a big gap on the downside on Monday managed to recoup some losses but closed with a loss of nearly 100 points from Friday’s close, forming a bullish candle on an intraday basis as the closing level was higher than the opening level.
The index witnessed a strong recovery in the trading session but the sentiment still remained bearish. The Nifty has strong support near 10,600-10,500 levels.
The Nifty50 which opened at 10,604 slipped to an intraday low of 10,586. It closed below its crucial 50-day exponential moving average (DEMA). Hence, a pullback could be on cards as 50-DEMA has usually lent a strong support to the index in the past.
The index bounced back after falling below 10,600 to hit an intraday high of 10,702 before closing 94 points lower at 10,666 levels. The index is likely to remain choppy or consolidate further ahead of the Reserve Bank of India’s 2-days policy meet.
“Huge gap-down opening was bought into by the market participants as Nifty50 recouped almost 100 points from intraday low of 10,586 which resulted in bullish candle on intraday basis but still remained a bearish formation as it closed in negative terrain when compared to last session’s close,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Monday’s gap down area of 10,702 –10,736 shall offer resistance for next couple of days and a close above 10,736 shall be considered as an initial sign of strength for short term,” he said.
Mohammad further added that as the market is heading into RBI event it may remain choppy for the next two sessions post which major directional clues shall emerge for this market which as of now are on the downside. “Short term support is available around 10,550 whereas critical support is placed at 10,394,” he said.
India VIX moved up by 3.85 percent at 15.83. VIX has to remain below 13.50-14 levels for a smooth ride.
On the options front, maximum Put open interest was seen at 10500 followed by 10700 and 10600 strikes while maximum Call OI is at 11500 followed by 11000 and 11200 strikes.
Fresh Put writing is seen at 10600, 10400 and 10200 strikes while fresh Call writing is seen at all the strikes mainly at 10700, 11000 and 10600.
“Option band signifies a lower trading band and range is shifting lower in between 10,500 to 10,800 zones. The Nifty formed a bullish candle on the daily chart. It has been making lower lows from last six trading sessions and weakness is visible,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“Now till it remains below 10,750 zones, weakness could continue towards 10,550-10,500 zones while on the upside hurdles are seen at 10,800 and 10,880 zones,” he said.
