Traders should remain neutral on the index and focus on stock-specific opportunities, Mazhar Mohammad of Chartviewindia.in has said.
The Nifty50, which remained range-bound for the most part of the day, saved its best for the last hour of trade and closed above the psychologically important 11,500 level, backed by positive global cues.
After opening flat at 11,478.55, the index slipped to the day’s low of 11,430.40. But gained strength in the final hour to hit the day's high of 11,554.75 before signing off the session 64.70 points higher at 11,535.
Experts said the rally indicated that the market had ignored India-China border tensions.
The index formed a bullish candlestick on daily charts as closing was higher than opening levels.
The consolidation would continue till the index decisively breaches 11,700, experts said. Traders should remain neutral while shifting focus to stock-specific opportunities, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
"It appears that the index is standing on a dual support available in the form of a 20-day exponential moving average as well as a demand line of a 36-day ascending channel support," Mohammad said
As long as this counter sustains above 11,325 levels, a rangebound move between 11,387 and 11,700 can be expected on a closing basis. If the Nifty gets pasts 11,700 on a closing basis, then a fresh leg of upswing can be expected, he said.
On the downside, a close below 11,387 may trigger a fresh round of selling, he added.
A further fall in volatility also supported the market sentiment. India VIX declined by 3.19 percent from 21.80 to 21.10 levels.
The options data continued to suggest same trading range of 11,200-11,800 for the Nifty in coming days.
Maximum Put open interest was seen at 11,000 followed by 10,500 strike, while maximum Call open interest was at 12,000 followed by 11,500 strike. Marginal Call writing was seen in 11,500 and 12,000 strike while Put writing was seen at 11,500 then 11,200 strike.
The Bank Nifty opened lower at 23,769 but managed to hold key support of 23,400-23,500 and ended the day on a positive note, up 62.50 points at 23,874.50. It traded inside the trading range of the last session and formed a Narrow Range price pattern for the second day.
"The Bank Nifty has to cross and hold above 24,000 for a move towards 24,500 and 25,200 while on the downside, key support exists at 23,400 then 23,200 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Positive setup was seen in Escorts, M&M, Tata Motors, Mindtree, Jubilant Foodworks, InterGlobe Aviation, Sun TV Network, Divis Labs, Tata Steel, BPCL and Reliance Industries while weak structure was seen in Bajaj Auto and Hero MotoCorp, he added.
Disclosure: Reliance Industries Ltd is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol.