For time being he advised traders to go long with a stoploss below 11,200 level and look for initial target of 11,400 but once that hurdle is crossed higher targets can't be ruled out.
The Nifty 50 started off August series on a positive note on July 26 and closed higher for the first time in seven consecutive trading sessions, backed by banking & financials and auto stocks.
The index formed a bullish candle on daily charts for the first time after forming a bearish candle in the previous six straight sessions. On the weekly scale though it saw a bearish candle formation on for the third consecutive week. For the week, the index lost 1.18 percent.
The positive close is a good thing as bulls managed to take charge of Dalal Street after many days, but a pullback rally is only possible if the index closes decisively above 11,300 level, experts feel.
The Nifty 50 opened lower at 11,247.45 and hit an intraday low of 11,210.05. The index, however, recouped losses in the late morning deals and remained higher for the rest of the session to hit the day's high of 11,307.60. The index closed 32.10 points higher at 11,284.30.
"Finally, bulls appear to have mustered some courage to arrest the vertical fall of last six sessions from the highs of 11,700 as Nifty recovered from the intraday lows of 11,210 to register a small bullish candle on the daily charts whereas on weekly charts it is a third consecutive bearish candle still suggesting upper hand of bears," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said with this recovery some of the momentum oscillators on lower time frame charts generated a buy signal thereby strengthening the chances of a pullback rally which will be confirmed once Nifty closes above 11,300 levels.
In such a scenario, initial targets for the rally continues to be around 11,400 but once that hurdle is decisively cleared the said index can head towards the zone of 11,550–11,600 levels, he added.
He said if index slips below 11,210 levels then it shall resume its downswing with targets placed in the zone of 11,100–10,850 kinds of levels.
For time being he advised traders to go long with a stop loss below 11,200 level and look for an initial target of 11,400. But once that hurdle is crossed, higher targets can't be ruled out.
On the Options front, maximum Put open interest (OI) is at 11,000 followed by 11,200 strike while maximum Call OI is at 12,000 followed by 11,500 strike.
Put writing is at 11,300 followed by 11,000 strike while Call writing is at 11,300 followed by 11,800 strike. Options data suggests a broader trading range between 11,000 to 11,650 zones.
India VIX fell 4.02 percent to 12.13 levels.
Bank Nifty managed to hold the previous day's low and witnessed buying momentum towards 29,400 zones. The index closed 282.25 points higher at 29,325.30.
The index formed a bullish candle followed by Inside Bar on the daily scale while Hammer candle on the weekly scale which suggests the decline is being bought into at lower levels, experts fell.
"Index needs to hold above 29,350 zone to witness an up move towards 29,500 then 29,650 zones while on the downside supports are seen at 29,000 then 28,888 levels," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
