Technical View: Nifty forms bearish candle but defends 9,200, keeping hopes alive for bulls

The Nifty once again failed to capitalise on strong opening gains and closed moderately lower on May 11 following as sell-off in banking and financials. Rising coronavirus cases that now stand 67, 152 in the country added to the uncertainty.

The index started off the week on a negative note and formed a bearish candle on daily charts as the closing was lower than the opening level.

The bulls have defended the psychologically important support of 9,200 for the last five trading sessions, raising hopes of their return, experts say.

The Nifty opened the week strong at 9,348.15 and hit an intraday high of 9,439.90 in the morning trade rally in Asian markets. But the index gradually erased those gains in the afternoon to the day's low of 9,219.95 in late trade. The index settled at 9,239.20, down 12.30 points.

"A close examination of last four trading sessions is revealing that Nifty is taking support on its 20-day simple moving average whose value is around 9,236. Hence, some sort of hope remains for the bulls as long as the index sustain above 9,200 levels on closing basis," said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in.

In that scenario a pull-back attempt can be initially seen towards 9,500 levels, he said.

A close below 9,200 could set off fresh selling pressure, with an initial target of 8,900.

For the time, traders should remain neutral on long side, where as shorting can be considered below 9,190 for a target of 8,900 with a stop above intraday high, Mohammad said.

Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas, also said long positions should be avoided and shorting opportunities be looked for.

"The index is having one such short-side opportunity at current level. 8,900-8,820 will be the key near-term target area on the downside," he said.

The Bank Nifty also mirrored the Nifty, as it opened strong at 19,610.45 but wiped out gains to fall below the 19,000-mark.

The index closed at 18,950.50, down 402.40, or 2.08 percent, and formed a bearish candle on the daily charts.

"The kind of fall seen in banks in last 10 days, there are indications that the Bank Nifty will go back down to 16,000 and much lower levels," Gautam Shah, founder and chief strategist at Goldilocks Premium Research, told CNBC-TV18.

So if one is looking at opportunities on the short side, it has to be the banking space, he said.