For time being traders should remain neutral for couple of sessions, and index long positions if any shall be squared off on a close below 11,100 levels, Mazhar Mohammad advised.
After opening in the green benchmark indices turned negative and further extended the losses in the afternoon session. Nifty came close to 11,000 levels but bounced back sharply in the last hour of trading.
At day's low, BSE Sensex breached 38,000 levels, falling 777.6 points or 2.01 percent to 37,846.10, while the Nifty50 corrected 221.15 points or 1.95 percent to 11,082.15.
The index closed below 11,300 levels and formed a bearish candle on the daily charts.
Mounting coronavirus cases, foreign institutional investors' (FIIs) exodus, RBI playing the waiting game to provide stimulus has prompted investors to exit the market.
Experts expect the volatility to continue in coming sessions and the strength is possible only if the index closes decisively above 11,433 levels, the upper end of consolidation range.
"Nifty50 appears to be on a consolidation mode as it almost revisited recent low of 11,036 levels before smartly recoiling. As of now, it appears that index may spend some time with a consolidation in the zone of 11,433 – 11,036 levels before witnessing a clear cut directional move," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
According to him, near term strength in the index can be expected on a close above 11,433 levels and in that scenario, it can extend to 11,536.
On the downside, the index needs to protect the ascending trendline, which is in progress from the October 2018 lows of 10,004, whose support for next trading session is placed around 11,080 levels, he said.
As the index bounced back on two occasions in the last 3 days after testing the said trendline, breach of this on closing basis can open up bigger downsides for the index, he added.
For time being, traders should remain neutral for couple of sessions, and index long positions if any shall be squared off on a close below 11,100 levels, Mazhar Mohammad advised.
Sahaj Agrawal, Head of Research - Derivatives at Kotak Securities also expects intraday volatility to continue for the next few days, which is in-line with global market movements.
He believes this correction is a very attractive opportunity for investors to accumulate stocks as the structural uptrend is intact.
On the options front, maximum Call open interest was seen at 12,000 then 11,800 strike while maximum Put open interest was at 11,000 then 11,300 strike.
Marginal Call writing was seen at 11,600 then 11,300 strike while Put writing was seen at 11,000 strike.
India VIX fell by 1.28 percent to 24.22 levels.
"India VIX is sustaining above the horizontal trend line on the daily scale and thus volatile swings may continue in coming days," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty continued to witness strong selling pressure, falling 523.35 points or 1.79 percent to close at 28,653.70 and formed a large bearish candle on daily charts.
"29,000 is likely to act as resistance on recoveries and only a close above 29,000 zone will trigger a phase of recovery for the index. Near term support is placed at 28,000 zone on the downside," Amit Shah, Technical Research Analyst with Indiabulls Securities said.
He advised fresh positional short selling should be avoided at this juncture as the index is in oversold territory. "Historically 100 EMA region on the weekly has acted as strong support zone for the Bank Nifty which is placed currently at 28,350, then 28,150 levels."Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!
