Technical View: Nifty forms bearish candle, key support at 11,571

April 10
18:29 2019

Nifty50 fell sharply in last couple of hours of trade and closed below psychological 11,600 level on April 10 as traders turned cautious ahead of first phase of general elections, and TCS & Infosys earnings.

The index fell towards its crucial support of 11,571 intraday and formed bearish candle on daily charts.

If the index decisively breaks its support of 11,571 in coming sessions, there could be steep fall which can drag the index to 11,300 levels, experts said.

Nifty50 after opening lower at 11,646.85 traded in a tight range of 40 points, but gradually extended losses in last couple of hours and hit day’s low of 11,571.75. The index closed 87.70 points lower at 11,584.30.

“Nifty50 registered a bearish candle nullifying the positive noises witnessed in Tuesday’s session as the game appears to be slowly slipping out of the hands of bulls. Interestingly, bulls appear to be attracting buying interest from around its 13 EMA which propped up the prices higher right from the beginning of the current leg of up move from the lows of 10,585 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

He said once bears manage to push the indices below the said average, whose value for next session is placed around 11,571 levels, then near term trend shall decisively favour bears which should eventually succeed in pulling down the indices towards 11,300 levels.

Hence, he advised traders to consider fresh shorts once Nifty closes below 11,549 levels and look for much lower targets whereas upside strength shall not be expected unless Nifty manages a close above 11,710 levels.

On the option front, maximum Put open interest (OI) is at 11,000 followed by 11,500 strike while maximum Call OI is at 12,000 followed by 11,800 strike.

Call writing is at 12,000 followed by 11,800 strike while Put unwinding is at immediate strike price.

Option band signifies a lower trading range in between 11,500 to 11,760 zones, experts said, adding sudden spike in VIX indicates limited upside with volatile swing in the market.

India VIX moved up sharply by 4.19 percent to 21.13 levels.

“Nifty index has been consolidating between 11,550 and 11,750 zones from last nine trading sessions. Now if it fails to hold 11,550 zone then a short term profit booking decline could be seen towards immediate support of 11,520-11,500 zones while hurdles are placed at 11,666 and 11,680 zones,” Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Bank Nifty is finding hurdle near 30,200 zones from past few trading sessions and slipped towards 29,750 level. The index closed 310.35 points lower at 29,803.50 and formed a bearish candle on daily scale as supply pressure is seen at higher levels.

“Now it has to cross and hold above 30,250 zones to witness an upmove towards 30,500 zone while on the downside major support is seen at 29,700 zone and below that fresh downside could open towards 29,500 and 29,250 levels,” Chandan Taparia said.

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