Traders should remain neutral and long side opportunity can be considered if the Nifty closes above 10,000 in the next session, says Mazhar Mohammad.
The Nifty50 saw huge swings on both sides on June 16. The index started off the session above the psychologically important 10,000- mark, but fell sharply from the day's high amid India-China border tensions before signing off with a gain of one percent.
The rally in global peers following US Fed Reserve's expanded bond-buying programme lifted sentiment.
The index closed above 9,900 levels, but failed to hold on to strong opening and formed a bearish candle on the daily charts.
The index was highly volatile but did not fall below the previous day’s low. As long as the Nifty holds 9,726, one can remain optimistic on the market, experts say.
Considering the extreme volatility, traders should remain neutral and long-side opportunity can be considered if the Nifty closes above 10,000 in the next session, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said. An intraday shorting opportunity will arise below 9,720 levels for a modest target of 9,630, he said.
The Nifty50 opened strong at 10,014.80 and hit the day’s high of 10,046.15 in the morning but wiped out all gains in afternoon to fall to the day's low of 9,728.50.
The index managed to show immediate recovery from that low point and gained 100.30 points or 1.02 percent to close at 9,914.
"The key technical take away at this juncture can be the fact that the Nifty in this sell-off almost tested Monday's low and bounced back without breaching it with an intraday low of 9,728 levels, which can be read as a positive sign," Mohammad said.
As long as Nifty sustains above 9,726, one can remain optimistic and look for a test of its 100-day simple moving average, placed at 10,156 and a close beyond this can extend the upswing towards 10,328, he said.
But if the index breaches 9,726, then it can slip towards 9,550 levels.
India VIX moved up by 1.20 percent to 32.97 levels.
On monthly options front, maximum Put open interest was at 9,000 followed by 9,500 strike, while maximum Call open interest was at 10,000 followed by 10,500 strike. Meaningful Call writing was seen in 10,300 followed by 10,100 strike while Put writing was seen in 9,000 followed by 9,300 strike.
The options data suggests that the Nifty could trade in wider range of 9,500 to 10,300 levels.
The Bank Nifty opened on a positive note but failed to hold above 20,500-20,600 levels. It corrected sharply from higher levels and drifted towards 19,500 in the later part of the session. However, a swift recovery was seen from lower levels and erased all intraday losses to close above 20,200 levels.
The index gained 383.80 points or 1.93 percent to close at 20,296.70 and formed a small bodied red candle.
"The small bodied red candle with long lower shadow suggests that dips are being bought into at lower levels while multiple hurdles are intact at higher zones. Looking at current chart structure, if it sustains above 20,200, then we may see a bounce towards 20,700 and then 21,200 levels while on the downside, major support is seen at 19,500 zone," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.Join the Moneycontrol Rule the New Normal powered by Lenovo webinar on the 18th of June. REGISTER NOW!
