Technical View: Nifty forms Spinning Top pattern on weekly charts, consolidation seen till index holds 11,900

The Nifty50 remained positive amid rangebound trade, with the Nifty closing above 11,900 mark on October 23, supported by auto and select IT and FMCG stocks.

The index formed a small-bodied bearish candle on the daily charts as closing was lower than opening levels, while there was a Spinning Top kind of pattern formation on the weekly scale. It gained 1.4 percent for the week.

Experts expect the consolidation to continue in the coming sessions unless the Nifty50 decisively breaches 12,025 levels.

Mazhar Mohammad of Chartviewindia.in advised traders to remain neutral on the long side whereas intraday traders can short below 11,900 and look for a modest target of 11,830.

The Nifty50 opened higher at 11,957.90 and extended gains to hit an intraday high of 11,974.55. It remained in a range of around 65 points before closing 33.90 points higher at 11,930.40.

"Nifty50 registered a Spinning Top kind of formation on weekly charts as the trading range for the week remained extremely narrow with 243 points. This formation along with indecisive patterns on the daily chart for three consecutive sessions are revealing the vulnerability of the markets around 12,000 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

He feels unless Nifty registers a strong close above 12,025 levels upside strength shall not be expected.

"Meanwhile Nifty shall remain sideways but vulnerable to a sell-off if it slips below 11,900 levels in the next trading session. In that scenario, eventual targets shall be towards 11,775 levels and if the same levels breach then it should see further selling pressure," he said.

Contrary to this, a strong close above 12,025 shall expand the upswing towards 12,225 levels, he feels.

India VIX moved down by 3.59 percent from 22.63 to 21.82 levels.

Given the consolidation, the option data continued to indicate the same immediate trading range for the Nifty at 11,700 to 12,100 for coming sessions.

On option front, maximum Put open interest was seen at 10,500 followed by 11,500 strike, while maximum Call open interest was at 12,500 followed by 12,000 strike. Call writing was seen at 12,500 then 12,000 strike while Put writing was seen at 11,800 then 11,900 strike.

Bank Nifty started off trade higher at 24,669.20 but failed to hold above 24,750 levels and remained consolidative for the most part of the day. It settled the day with a moderate loss of 5.85 points at 24,478.30 but continued its higher highs - higher lows formation on the weekly scale.

The index formed a small bearish candle on the daily scale as it closed lower than opening levels, but continued its higher low formation for the sixth consecutive session.

"Bank Nifty has to hold above 24,250 to witness an up move towards 24,750 then 25,000 while on the downside support is seen at 24,000 then 23,750 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.