According to Mazhar Mohammad, contrary to this if bulls manage to defend 11,769 levels then consolidation process can be expected to continue with initial targets present around 11,930.
The Nifty50 after rangebound move extended losses sharply in late trade amid source-based news that India may impose retaliatory tariffs on 29 US products. All sectoral indices closed in the red with Bank, Auto, FMCG and Realty being the biggest losers with 1-2 percent loss.
The index ended sharply lower but managed to hold 11,800 levels, forming bearish candle on daily as well as weekly charts which suggests selling pressure is seen at higher levels. For the week, it declined 0.4 percent.
It has been consolidating in between 11,761 to 12,041 zones from fourteen 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, experts said.
The Nifty50 opened lower at 11,910.10 and traded in a range, but suddenly fell sharply in late trade and dipped below 11,800 to hit an intraday low of 11,797.70. The index closed 90.70 points lower at 11,823.30.
"Nifty50 registered a bearish candle on daily as well as on weekly charts thereby negating the impact of 'Hammer' formation on June 13. Moreover, trading range of last couple of weeks remained narrower with current week witnessing a range of 203 points," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said in the next trading session the index may register a breakdown from narrow ranges of weekly charts if it slips below 11,769 levels.
"In such a scenario, correction shall get further accentuated with a directional move emerging on the downside with initial targets of 11,600 and eventually the test of bullish gap, registered on May 20, present in the zone of 11,591–11,426 can't be ruled out," he added.
According to Mazhar Mohammad, contrary to this, if bulls manage to defend 11,769 levels, then consolidation process can be expected to continue with initial targets present around 11,930. For time being he advised traders to avoid long positions on the index.
India VIX moved up by 2.10 percent at 13.94 levels.
"Volatility is hovering below 15 zone which is supporting for buying interest on any declines, but at the same time, ruling out for a major swing in the market," experts said, adding Option data suggests a wider trading range in between 11,750 to 12,100 zones.
On the option front, maximum Put open interest (OI) is at 11,500 followed by 11,800 strike while maximum Call OI is at 12,000 followed by 12,500 strike.
Call writing is at 11,900 followed by 12,000 strike while Put unwinding is at 11,800 then 11,700 strike.
"Now till index holds below 11,888 zone it could extend its weakness towards lower band of the support at 11,761 then a fresh decline towards 11,660 levels while on the upside immediate hurdles are seen at 11,965 then 12,000 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty failed to surpass previous day's high and declined nearly 400 points to close near its lower band of the trading range near 30,600 zone. It was down 361.75 points at 30,614.35 and formed a bearish candle on daily as well as on weekly scale which suggests bears are holding tight grip at higher zones
"Now till it holds below 31,000 zone, it could extend its weakness towards 30,250 then 30,000 zones while on the upside hurdles are seen at 31,000 then 31,313 zones," Chandan Taparia 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.
