Chandan Taparia of Motilal Oswal Securities said the index has to hold above 11,435 to extend its move towards 11,500-11,600 levels
Motilal Oswal Securities
The Nifty failed to surpass Thursday’s high of 11,495 and witnessed a decline in profit-booking. It negated the formation of higher highs of the last five trading sessions and formed a Bearish Belt Hold candle and a Spinning Top candle on the daily and weekly charts, respectively.
The daily chart suggests a pause in positive momentum while the index has been forming higher tops-higher bottoms on the weekly scale. It has been respecting its rising support trend line or a rising channel for the last 32 trading sessions by connecting all the recent swing highs and lows.
It has to hold above 11,435 to extend its move towards 11,500-11,600 levels. On the downside, a drift below 11,350-11,333 could see it decline to 11,250–11,171 levels.
The Nifty rallied 328 points from its July settlement of 11,167 and is facing hurdle near the upper band of the open interest (OI) concentration at 11,500. It has been making higher lows for the last six consecutive weeks. If the previous week’s low (around 11,350) is broken, only then we will see an immediate change in trend.
India VIX moved up 6.37 percent from 12.08 to 12.85, while aggregate put call ratio is hovering near 1.75 levels. Maximum put OI is seen at 11,000 strike, followed by 11,200 strike. Maximum call OI is intact at 11,500 strike, followed by 11,600 strike. We have seen fresh call writing at 11,500 strike, whereas marginal put writing is seen at 11,350 and 11,200 strikes.
Bank Nifty formed a Bearish Engulfing pattern on the daily scale as it corrected from its record high of 28,377 to 28,100 zones. It has negated its higher top-higher bottom formation on the daily scale after six trading sessions.
If it sustains below the 28,000 zone, then weakness could see it trending lower to 27,750-27,660 levels. On the upside, resistance is seen at 28,333. Once this levels is decisively taken out, it can head towards 28,500 and 28,700 levels.