For time being, it looks prudent, for short term traders to adopt a neutral stance on the indices till more clarity emerges on directional front, Mazhar Mohammad of Chartviewindia.in advised.
The Nifty50 extended gains for second consecutive session and closed the last day of December series on a positive note Thursday, but failed to hold on to 10,800 levels. Sharp rally in global stocks boosted sentiment.
The index formed a bearish candle on the daily charts as it closed lower than its opening high levels.
Experts expect the positive momentum to continue in coming sessions if the Nifty holds its crucial 10,747 levels. The January series will begin on Friday, which could see some consolidation.
The Nifty50 started off the expiry day on a strong note at 10,817.90 and remained in a positive terrain amid consolidation throughout the session. The index touched an intraday high of 10,834.20 and low of 10,764.45, before closing 49.90 points higher at 10,779.80.
"As of now it appears that, post Wednesday's strong come back, momentum in Nifty50 is not strong enough to propel a sustainable upmove in the indices as Nifty50 registered a small bullish candle after a gap up opening suggesting a rangebound move. But price behaviour on expiry session looks some what weak as bulls failed to capitalise on the strong opening and given up all intraday gains to close near the lowest point of the session which depicted a bearish candle on intraday session," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
Hence, it looks imminent for bulls to sustain above 10,747 kind of levels to retain positive bias whereas breach of the said level may lead to a corrective swing on the downside again tilting the tide in favour of bears, he said.
In case bulls manage to defend the level of 10,747 then a modest target of 10,894 can be projected, according to him.
For time being, it looks prudent, for short term traders to adopt a neutral stance on the indices till more clarity emerges on directional front, he advised.
India VIX remained flat to positive with the gains of 0.96 percent at 16.07 levels. VIX needs to cool off below 16 to get further move else we could again get stuck in the range, experts said.
On the option front, open interest (OI) is scattered at different strikes as it's the beginning of new series for the new calendar year 2019.
Maximum Call OI is at 11,000 followed by 11,200 strike while maximum Put OI is at 10,500 followed by 10,000 strikes. Option band signifies a broader trading range in between 10,500 to 11,000 zones.
"The Nifty index has recently made high near to 10,985 while low near to 10,534 and now hovering near to the mid of the zones. As of now price set up suggests a broader trading range with limited upside and needs to hold above 10,750-10,777 zones to extend it move towards 10,850 then 10,929 levels while on the downside support exists at 10,700 levels," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty failed to cross its immediate hurdle of 27,250 zones and slipped towards 26,850 level. The index closed 108.25 points lower at 26,878.55.
"It formed a bearish candle on daily scale but till it holds above 26,666-26850 zones it can extend its move towards 27,200 then 27,350 levels while on the downside major support exists at 26,666 then 26,400 zones," Taparia said.
Nifty closed negative at 10,779 with the loss of 0.73 percent on expiry to expiry as November series closed at 10,858 levels. Bank Nifty closed flat to negative at 26,878 on expiry to expiry basis with the loss of 0.23 percent as November series closed at 26,939 levels.
Roll cost again fell which indicates that shorts are still rolling to the next series as less long aggression seen in the market. Nifty future has seen rollover of around 71 percent while Bank Nifty has seen rollover of around 74 percent as per the provisional data which is in line to the last series.
