The Nifty50 has seen a smart recovery from its lows in late trade and closed flat with a positive bias on June 6, continuing consolidation for a week now as traders may be looking cautious with the beginning of the three-day Monetary Policy Committee meeting on June 6.
The index opened above the 18,600 mark but wiped out early gains to trade lower and hit an intraday low of 18,532. However, there was a recovery in late trade and as a result the index closed at 18,599, up 5.2 points and formed Doji candlestick pattern on the daily charts, indicating indecisiveness among bulls and bears about future market trend.
The Nifty50 has been taking support at 18,500 and facing hurdle on the higher side at 18,600, which was also its first all-time high after Covid. Hence, if the index manages to sustain above 18,600 and takes out its recent swing high (18,662), then a possible march towards the 18,800-18,900 area can't be ruled out in coming sessions, experts said.
On the four-hourly charts, the index has formed bullish candlestick pattern, which somewhat resembles Bullish Engulfing kind of pattern formation, which is a positive sign.
"On the daily chart, it formed a Doji candle, indicating indecision in the market. As a result, the overall trend is expected to remain sideways, with the index not showing a clear direction in its movement," Rupak De, Senior Technical at LKP Securities said.
In terms of levels, he feels there is a support level at 18,500, which suggests a potential floor for the index, while a resistance level is identified at 18,665, indicating a barrier to further upward movement.
According to weekly Options data, the maximum Call open interest was seen at 18,600 strike, followed by 18,800 and 18,700 strikes, with meaningful Call writing at 18,800 strike, then 18,900 strike. On the Put side, we have seen maximum open interest at 18,500 strike, followed by 18,600 strike, with writing at 18,200 strike, and then 18,400 strike.
The above data indicated that 18,600 is expected to be crucial for further upside towards the 18,700-18,900 area, with immediate support at 18,500.
Bank Nifty
The Bank Nifty opened higher at 44,157 but failed to hold above 44,200 and gradually drifted towards 44,000 mark in the first half of the session. However, some recovery was seen from lower levels in the last hour of the session and finally closed with 63 points gains at 44,165.
The index has also formed Doji candlestick pattern on the daily charts for second straight session, indicating tug of war between bulls and bears ahead of the outcome of RBI policy meeting.
Overall it remained consolidative in a narrow range of 200 points as selective private banks continued to hold the Index while few public banks remained lacklustre. "Now it has to continue to hold above 44,044 to make an up move towards 44,500 then 44,750 levels, while on the downside, it may find support at 44,000, then 43,750 levels," Chandan Taparia, Senior Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
The Nifty Midcap 100 and Smallcap 100 indices continued northward journey, rising 0.06 percent and 0.54 percent, respectively, while the volatility remained at low levels, keeping the index in a smaller range. India VIX, which measures the expected volatility for the next 30 days in the Nifty, rose by 2.17 percent to 11.38 levels, from 11.14 levels.
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