Mazhar Mohammad of Chartviewindia.in said unless Nity50 registers a strong close above 10,985 levels, in next couple of sessions, further gains should not be expected.
The Nifty50 rallied sharply and closed at one-month high on Monday, driven by positive Asian cues and the spike in Reliance Industries. But the market breadth was in favour of bears as two shares declined for every share rising on the NSE.
The Nifty index is away 38 points from reclaiming 11,000 and formed bullish candle on the daily charts.
The rally to continue from here on is possible only if the Nifty decisively closes above 11,000 levels, but the negative advance:decline ratio indicates some consolidation in coming sessions, experts said.
The Nifty50 after a flat start followed by marginal dip in early trade rallied sharply and remained above 10,950 levels for major part of the session to hit an intraday high of 10,987.45. The index closed 54.90 points higher at 10,961.90, the highest closing level since December 19, 2018.
"Albeit Nifty50 moved out of its 3-day old minor consolidation phase with a Spinning Top kind of indecisive formation, this move is on the back of negative advance decline ratio suggesting that broader markets remained under pressure," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said unless Nity50 registers a strong close above 10,985 levels, in next couple of sessions, further gains should not be expected. "However, a strong close above psychologically important resistance point of 11,000 may warrant a huge short covering which can pull the indices to much higher levels towards its logical targets placed around 11,300 kind of levels.
Meanwhile though strong support can be expected in the zone of 10,844–10,825 levels, short term traders are advised to trial their stoploss level to below 10,880 kind levels on closing basis, according to Mazhar.
India VIX moved up sharply by 8.69 percent to 18.06 levels. Volatility has to cool down further to get a decisive range breakout.
On the option front, maximum Put open interest (OI) is at 10,700 followed by 10,800 strike while maximum Call OI is at 11,000 followed by 11,200 strike.
Put writing is at 10,900 followed by 11,000 strike while Call unwinding is at all the immediate strike price. Option band signifies a higher shift in trading range in between 10,750 to 11,080 zones.
"Nifty index formed a bullish candle on daily scale and managed to hold above 10,880-10,900 zones. Now till it holds above 10,850-10,880 zones, it can witness an upmove towards 11,080 then 11,176 zones while on the downside support exists at 10,850 followed by 10,777 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty traded in range of 27,400-27,600 zones for most part of the trading session and formed a Doji Candle on daily scale which suggests indecisiveness at higher levels. The index closed 76.90 points higher at 27,533.60.
"Now it has to continue to hold above 27,350 zones to witness an upmove towards 27,750 then 28,000 zones while immediate support exists at 27,250-27,150 zones," Chandan said.
