A further rise in volatility index may result in a roller-coaster move in the market, say experts.
The Nifty saw another volatile session on June 17, as the index erased all gains after lunch to close below 9,900 amid fears of an escalation in border dispute with China and consistent FII outflow.
The index closed near its opening levels and formed a Doji pattern on daily charts, indicating indecisiveness among the bulls as well as the bears.
As the index has been moving in a trading range for the last few sessions, experts expect consolidation to continue unless there is a breakout on either side.
Index traders should focus on stock-specific opportunities, said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in.
The Nifty50 opened moderately lower at 9,876.70 and dropped to the day’s low of 9,833.80 in the morning. It gained momentum in the afternoon to hit the day's high of 10,003.60 but wiped out the gains to settle at 9,881.15, down 32.85 points.
“Last three sessions of price behaviour hint that the market is directionless and stuck in a trading range between 10,000 and 9,726," Mohammad said.
In the near term, it needs to emerge out of this zone to witness some sort of directional move, he said. Even on a breakout above 10,000, upside seems to be limited as there are multiple hurdles at every 100 points upmove. “Initially strength may get extended upto 10,132 levels and a close beyond that shall extend the rally towards 10,328," he said.
On the downside, initial support is visible around 9,726 but a breach can extend the weakness towards its critical support of 9,544 levels and a close below it would favour the bears, he added.
Volatility has been moving higher. India VIX moved up by 1.18 percent at 33.35 levels on June 17.
"Further rise in volatility index may result in a roller-coaster move in the market," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
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.
Call writing was seen in 9,900 followed by 10,500 strike while Put writing was seen in 9,900 followed by 9,800 strike. Option data suggests a wider trading range of 9,500 to 10,200 zone for the Nifty.
The Bank Nifty opened on a negative note but started moving higher from lower levels. It rallied around 650 points from its opening low of 19,978 but failed to sustain above the 20,600-mark to again correct in the last two hours of trades.
It concluded the session down 0.47 percent at 20,201.80 and formed a small body candle on daily chart.
It moved within the trading territory of previous day’s session and formed an Inside Bar pattern on the daily scale.
"At the current juncture, strong support for the Bank Nifty is placed at 19,750 - 19,500 zone while resistance can be seen around 20,500-20,700-21,200 levels. Looking at current chart structure, traders are advised to trade with positive bias and use declines as buying opportunity," Taparia said.Join the Moneycontrol Rule the New Normal powered by Lenovo webinar on the 18th of June. REGISTER NOW!
