The Nifty has been trading in a narrow range of 21,600-21,700 through the past three trading sessions, as markets took a breather from a long run-up. Analysts believe this rangebound trend is likely to continue as the broader market structure is in temporary overbought situation.
At 10:30am, the Sensex was down 104.64 points or 0.14 percent at 72,135, and the Nifty was down 11.40 points or 0.05 percent at 21,720. About 2,266 shares had advanced, 945 shares declined, and 134 shares were unchanged.
Blue bars show call OI change and purple bars show put OI change. OI stands for open interest
On the option front, 21,700 saw most put writing, followed by 21,600 as bulls created support for the index. Point 21,700 also saw heavy call writing, followed by 21,900 and 21,800. Thus, analysts believe 21,800 will be immediate resistance level.
"Our view is that the broader market structure is still bullish, but due to a temporary overbought situation, we may see some profit-booking at higher levels. For traders following the trend, 21,600 could act as a crucial support level. If the index manages to sustain above the same, then it can go up to 21,850-21,925," Shrikant Chouhan, head of equity research at Kotak Securities, said.
According to Mandar Bhojane of Choice Broking, it is advisable for traders and investors to consider buying opportunities during dips in the Nifty, while maintaining an appropriate stop-loss. "Stay vigilant and make informed decisions in today's market," he said.
A close below 21,600 may send the market to 21,500, analysts added.
For the Bank Nifty, the resistance is near the 48,500 level with near-term support maintained near 48,000 zone. "The Bank Nifty is expected to have a daily range of 47,900–48,600 levels," domestic broking firm Prabhudas Lilladher said.
As for individual stocks, Vodafone Idea, Delta Corp, BHEL, and REC saw strong addition of long positions. Birlasoft, Eicher Motors, Cholamandalam Finance and MCX saw the addition of short bets which hints at a possibility of a downside in the near term.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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