Technical View: Nifty50 forms a bearish candle; 10,200 crucial for bulls to gain momentum
It was a volatile day for Indian markets despite starting on a positive note. The Nifty index reclaimed 10,200 but profit booking at higher levels pushed the Nifty below 200-DMA for the third consecutive day in a row and made a bearish candle on Thursday.
Broader markets continue to underperform: the S&P BSE Smallcap index closed 1 percent lower while the S&P BSE Midcap index ended 0.7 percent down.
The Nifty50 witnessed profit booking decline soon after it reclaimed 10200. The index has crucial support around 200-DEMA but one thing is clear that the current market structure closely resembles sell on rallies kind of markets.
The index witnessed selling pressure in three out of four days when the index rose above 10200 levels. Hence, for bulls to regain control, 10,200 is crucial for the bulls, suggest experts.
The Nifty index which opened at 10105 rose to an intraday high of 10207 before bears mauled the D-Street. The index slipped to an intraday low of 10105. The index closed 40 points lower at 10,114.
“It is looking like a day of consolidation on the bourses as Nifty50 moved in a one percent range in both the directions before signing off the day with an indecisive formation a bearish candle which closely resembles a Spinning Top for the second session in a row,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“However, bears at this juncture, appears to have lost momentum as selling pressure on the downside is remaining tepid as Nifty50 appears to be drawing support from its 200-Day Exponential Moving Average for last 4 trading sessions as it is successfully defending this level,” he said.
Mohammad further added that technical picture on momentum oscillators is slowly tilting in favour of bulls though a stronger confirmation in this regard shall come only on a close above 10200 levels. For any reason, if weakness persists in next session below 10100 levels then it may initially lead to a retest of recent lows
“The intensity of selling pressure shall get accelerated on a close below 10049 levels which may open up more downsides for the index. Hence, at this juncture it looks prudent for traders to remain sidelines and just wait for appropriate clues before initiating the trade,” said Mohammad.
India VIX move up by 0.93% at 15.24. On the options front, maximum Put open interest is placed at 10000 followed by 10100 strikes while maximum Call open interest is at 10500 followed by 10400 and 10200 strikes.
Fresh Put writing is seen at 10100 strikes while Call writing is also seen at 10200 followed by 10100 strikes.
“Option band signifies a trading range between 10000 to 10300 zones. The Nifty index formed a Bearish candle on the daily chart and witnessed sustain selling pressure in the last one hour of the session,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“It is hovering near to its 200 DEMA but follow-up buying is missing even after its recent swing support at 10050 zones,” he said.
Taparia further added that the index has to cross and hold above 10141 zones to witness a bounce towards 10222 then 10276 while a decline below 10050 could start the fresh leg of decline towards the psychological support of 10000-9980 zones.