Considering the high volatility witnessed on April 8, traders should remain neutral in the next session, say experts.
The Nifty failed to sustain the psychologically important 9,000-mark and closed moderately lower on profit booking on April 8, a day after making the biggest single-day gain of more than 700 points.
The index encountered selling pressure from the intraday high of 9,131 and lost 383 points to form a Shooting Star pattern with long upper shadow on daily charts.
A Shooting Star pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. This pattern is usually formed in an uptrend and is treated as a reversal pattern, but it would require confirmation before it can be concluded that the trend will get reversed.
Considering the high volatility on April 8, traders are advised to remain neutral in the next session.
The Nifty50 opened lower at 8,688.90 but gained strength in early trade to hit an intraday high of 9,131.70. The index, however, gradually wiped out all the gains in the afternoon to trade lower for the remaining session. The index closed at 8,748.75, down 43.45 points or 0.49 percent.
"In the next trading session if this counter slips below 8,650 levels, then weakness will be confirmed and in such a scenario it shall ideally resume downswing with initial targets present between 8,550 and 8,360 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
Mohammad said strength in the index and fresh buying opportunity should not be expected unless it closes above 9,000.
India VIX moved up by 0.85 percent to 52.24 levels.
"The VIX moved up marginally after the decline of last four consecutive sessions but overall it is cooling down from higher levels, which may provide some stability to the bulls," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the monthly options front, maximum Call open interest was at 9,000 and then 10,000 strike while maximum Put open interest was at 8,000 then 7,500 strike.
Nominal Put writing was at 8,500 followed by 9,000 strike, whereas Call writing was seen at 9,000 strike.
The options data indicates that an immediate trading range for the Nifty could be 8,200-9,200.
The Bank Nifty witnessed tremendous short covering move in the initial hour of trades and rallied by more than 1,800 points from opening lows. In line with the benchmark index, the Bank Nifty also corrected sharply in the later half and squandered the gains to conclude the session below 19,000.
The index fell 116 points, or 0.61 percent, to 18,946.50 and formed a Doji candle on the daily chart with large upper shadow, indicating selling pressure at higher levels.
"Going forward, immediate resistance for the Bank Nifty is placed at 19,700 then 20,500 while support can be seen around 18,000 levels," Taparia said.
"Overall, the medium-term chart structure is negative and bounce could be sold again at higher zones. Thus, traders shouldn't get carried away with the bounce and are advised to remain light on positions," he added.Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!
