Traders should focus on stock-specific opportunities by remaining neutral on the index, says Mazhar Mohammad.
After the Budget Day carnage, the Nifty rebounded in a volatile day of trading and closed with minor gains on February 3, pricing in the budgetary proposals.
Private banks, auto, FMCG, metals and realty stocks gained, while PSU banks, IT and some pharma stocks lost ground.
The index defended 200-day exponential moving average, placed at 11,663, to close above 11,700 and formed a bullish candle on the daily charts as the closing was higher than the opening tick.
Some consolidation with a positive bias is likely to be seen in coming sessions and traders should continue with stock-specific opportunities, experts say.
The Nifty, after opening lower at 11,627.45, turned volatile. The index hit an intraday high of 11,749.85 and a low of 11,614.50 before closing 46 points higher at 11,707.90.
"Though it will be too early to conclude that bottom is in place at Monday’s low of 11,614, some consolidation with positive bias can't be ruled out in the next couple of trading sessions as the Nifty is in an oversold territory," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
According to him, if the bulls succeed in defending the low of 11,614, then a best-case target of 11,934 can't be ruled out on the Nifty in the next few sessions.
However, the bulls may abort this pull-back attempt if the Nifty fails to sustain above its 200-day moving average on a closing basis and weakness shall resume with ultimate targets placed around 11,200, he said.
Mohammad advised traders to focus on stock-specific opportunities by remaining neutral on the index. "Fresh shorting opportunity shall arise on a close below 11,600 levels."
The volatility cooled off after the Budget, as India VIX fell by 6.28 percent to 15.78 levels.
"Volatility is likely to cool off from higher zones as the major event like Union Budget 2020 get unfolded but a change in trend and the bears' grip could keep the volumes at comparative higher zones," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
Maximum Put open interest was at 12,000 followed by 11,500 strike while maximum Call open interest was at 12,500 followed by 12,000 strike. Put writing was seen at 11,700 then 11,500 strike while minor Call writing was seen at 11,900 then 11,800 strike.
The Bank Nifty index outperformed the benchmark indices and formed a positive candle on the daily chart. However, it continued to make lower lows for the fourth consecutive week.
The banking index rebounded from its support of 100 percent extension level of previous fall from 32,427 to 30,614 and managed to close a tad above 200-DEMA, up 0.68 percent at 30,023.30.
"If the Bank Nifty holds above its immediate support of 29,600 levels, then we may see a bounce towards 30,400–30,600 levels. But this would be mere a pull-back move of the ongoing fall and thus, traders shouldn't get carried away and are advised to refrain taking aggressive long positions," Taparia said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
