Mazhar Mohammad said in next session if Nifty closes below 11,412 levels then it may set the tone for bigger correction which may eventually lead the index towards 11,230 kinds of levels.
The Nifty50 started the day higher but failed to hold on to the gains seen in the morning and closed lower on Friday. Traders preferred to take money off the table on last day of truncated week after Federal Reserve preferred to hold rate and indicated no rate hikes in 2019.
The index closed below psychological 11,500 levels and formed bearish candle on daily charts for the second consecutive session.
It continued uptrend for fifth consecutive week and gained 0.3 percent, forming small bearish candle which resembles a 'Doji' kind of formation on the weekly charts.
The index negated its formation of higher lows after eight trading sessions which implies that some pause is visible at higher levels, experts said, adding 11,400 could be crucial support for the market.
The Nifty50 after opening higher at 11,549.20 extended gains and hit a day's high of 11,572.80, but it wiped out all gains after an initial hour and drifted lower to hit an intraday low of 11,434.55. The index closed at 11,456.90, down 64.10 points.
"Weakness appears to be getting more pronounced in Nifty50 as the said index registered bearish candles for two consecutive sessions in a row which resulted in a Doji kind of indecisive formation on weekly charts," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
He said already broader market appears to be under pressure and in corrective mode as market breadth remained negative and in favour of bears for major part of the week even on day’s with positive closes.
Hence, in next session if Nifty closes below 11,412 levels then it may set the tone for bigger correction which may eventually lead the index towards 11,230 kinds of levels, he added.
For time being, as 11,572 appears to be a critical hurdle, he feels and advised traders not to create long positions in hurry by making use of current dip rather they will be better off by going long only on a close above 11,572 levels.
India VIX moved up by 1.53 percent to 16.27 levels.
Volatility has come down from highs but slightly moved from its base of 14 zones so some volatile cues could be seen, experts said, adding option band signifies a trading range in between 11,300 to 11,600 zones.
On Option front, maximum Put open interest (OI) is at 11,000 followed by 11,200 strike while maximum Call OI is at 11,600 followed by 11,500 strike.
Put writing is at 11,600 followed by 11,450 strike while Meaningful Call writing is at 11,600 followed by 11,500 strike.
"Now till Nifty index holds below 11,550 zone weakness could be seen towards 11,400 then 11,333 zone while on the upside hurdle is seen at 11,500 then 11,550 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty made a new life-time high of 30,008 intraday but witnessed profit booking at higher levels and drifted sharply towards 29,508 zone. The index closed 249.70 points lower at 29,582.50.
"It finally negated its higher lows formation after fourteen trading sessions and formed Bearish Engulfing candle on daily scale which indicates that supply is visible at higher levels," Chandan Taparia said.
Now till it holds below 29,888 zone it can extend its losses towards 29,250 then 29,000 zone while on the upside major hurdle is seen at 30,000 zone, he added.
