For time being it looks prudent on the part of traders to focus on stock specific opportunities by adopting neutral stance on index, Mazhar said
Nifty fell sharply in late morning deals, but rebounded in afternoon to close marginally higher on June 13. The index ended above 11,900 after testing logical support of 11,815 and formed Hammer pattern on daily charts that indicates declines are being bought near the lower band of the trading range.
A Hammer which is a bullish reversal pattern is formed after a decline. A Hammer consists of no upper shadow, a small body, and long lower shadow. The long lower shadow of the Hammer signifies that it tested its support where demand was located and then bounced back.
Nifty opened lower at 11,873.90 and extended losses to hit an intraday low of 11,817.05 in late morning on weak global cues and mixed macroeconomic data, but started recovery in the afternoon and gradually gained strength to touch day's high of 11,931.35. It closed 7.80 points higher at 11,914.
India VIX fell 3.26 percent to 13.66.
The follow-through buying in the coming session and index closing above 12,000 will confirm uptrend otherwise consolidation may continue, experts said.
"Nifty smartly recoiled after almost testing its logical support of 11,815 that resulted in a Hammer kind of formation, which should ideally have a bullish connotation for the near term and need to be confirmed with a follow-through buying in next session," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said chart structure as of now appears to be unfolding in the form of a contracting triangle with lower tops and higher bottoms. "Hence, unless Nifty closes above 12,000, the consolidation process may continue for a couple of trading sessions going forward," he added.
He further said on the downside, the low of 11,817 should be respected and the breach of said low shall negate the consolidation process by extending the weakness initially towards 11,769.
For time being it looks prudent on the part of traders to focus on stock specific opportunities by adopting a neutral stance on the index, Mazhar added.
In the options market, maximum Put open interest (OI) was at 11,500 followed by 11,800 while maximum Call OI was at 12,000 followed by 12,500. Put writing was at 11,800 while Call writing was at 12,000 followed by 12,100.
Options data suggests a wider trading range of 11,750-12,100, experts said, adding Nifty has been consolidating in between 11,761 and 12,100 from 13 trading sessions and requires a decisive range breakout to commence the next leg of rally else it is likely to move in this broader trading range.
Bank Nifty managed to hold multiple supports of 30,600 and witnessed a strong recovery of 400 points towards 31,000. The index closed 10.40 points higher at 30,976.10 and formed a Hammer candle near the lower band of the trading range.
"The pattern indicates support based buying and now it has to hold above 31,000 to witness an upmove towards 31,313 then 31,500 while on the downside major supports exists at 30,750 then 30,600," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.
