The Nifty started the September 6 session on a strong note but failed to hold on to the gains and remained range-bound in volatile trade.
The index opened at 17,696 and climbed to 17,765 but lost the momentum to sink to 17,588. It finally closed 10 points lower from the previous day at 17,656 and formed a small-bodied bearish candle on the daily chart.
The index continued to trade within the 17,400- 17,777 range for the fourth consecutive session. It needs to decisively break the upper end to move towards the 18,000 mark, experts said.
“Bulls appear to have encountered selling pressure from the intraday high of 17,764 levels as they neared the higher end of the consolidation range at 17,777 levels. Hence, strength shall not be expected unless bulls manage to push the index beyond 17,777 levels. In such a scenario, the rally can expand towards 17,990,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.
The inability of the index to sustain above 17,540 can drag it to the lower end of the consolidation range at around 17,401.
For the time, traders should remain neutral on the index but long positions can be considered if the Nifty manages to sustain above 17,780 for more than 60 minutes with a target of 17,900. Stop for this trade will remain below intraday low, the market expert said.
Selling in select banking & financial services, auto, FMCG and IT stocks weighed on the sentiment.
Broader markets continued to outperform the benchmark. The Nifty midcap 100 and smallcap 100 indices gained 0.6 percent and 0.3 percent.
The volatility index India VIX fell by 0.7 percent to 19.53 levels. The market stability is likely only after the VIX falls below 18 levels, experts said.
On the options front, the maximum Call open interest was seen at 18,000 strike followed by 18,500 strike, while the maximum Put open interest was at 17,000 strike then 17,500 strike.
Call writing was seen at 17,700 strike then 18,000 strike, while marginal Put writing was seen at 17,300 strike then 17,700 strike.
The data indicates that in the immediate term, the Nifty will move in the 17,300- 17,800 range due to high volatility.
Banking index
The Bank Nifty opened positive at 39,893 and moved in a zig-zag manner throughout the day. It touched the psychologically vital 40,000 mark but could not sustain and closed 139 points lower at 39,666.
The index formed a bearish candle on the daily scale but formed higher lows for the fifth session running.
It has to hold above 39,500 to make an up move towards 39,750 and 40,000, whereas supports are placed at 39,250 and 39,000 levels, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
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