Kshitij Anand Moneycontrol News
The Nifty50 opened with a gap on the lower side and broke below its crucial support level placed at 9900, 9880 and 9850 on Tuesday amid reports that North Korea fired a ballistic missile that flew over Japanese airspace, reigniting geopolitical tensions that had cooled between North Korea and US allies in the Pacific Rim.
Broadly speaking, Nifty is likely to consolidate in a range of 9,950 - 9,685 levels and only either way breakout or breakdown will dictate the near-term trend, suggest experts.
Indian markets continue to rise amid relentless selling by foreign institutional investors (FIIs) in the month of August, geopolitical concerns as well as muted earnings from India Inc. for the quarter ended June.
Also, the market regulator, SEBI, a crackdown on shell companies did not auger well for the domestic equity markets. But, chances are that Indian market should be able to ride through.
Indian markets are trading on a strong footing and any declines from current levels should be used by investors to invest in quality stocks which are available at fair valuations, suggest experts.
"This is a geopolitical risk and it is likely to be there for some but will soon fizzle out soon. Investors should use dips caused by any geopolitical tensions as a chance to buy into quality stocks," A.K.Prabhakar, Head -Research at IDBI Capital told Moneycontrol.
"But, it is important is to hold on to some cash as we don't know if this will go to the next level. There could be small correction till 9500, but that itself is doubtful," he said.
Asian markets sink further jolted by North Korean missile test over Japan which led to buying in safe havens assets such as gold, Japanese Yen as well as US Treasuries.
“The North Korean situation is likely to continue being a short-term worry for global markets. I think going forward, markets would be volatile for a while. It would be sensible to take some risk off the table,” Manulife AMC's Geoff Lewis said in an interview with CNBC-TV18.
Technically, the index slipped below its crucial support level of 9880 in intraday trade but as long as it holds above 9800 bulls might be able to make a comeback.
For the momentum to continue the index must hold above 9,880 and close above 9,948 which would open room for further upside towards Mount 10K, suggest experts.
“On a directional basis, we continue to maintain our positive stance and expect the index to rally higher as the weekly Higher Top Higher Bottom formation is still intact. Also, the RSI (14) has started inching up after taking support near 60 levels,” Aditya Agarwal, Head Technical Research, Way2Wealth Brokers Pvt. Ltd told Moneycontrol.
“On the higher side, Nifty will face supply pressure around 9950-9980 and if indices manage to sustain above that than further short covering is expected that can take nifty towards it previous high level of 10,140,” he said.
The Nifty50 made a ‘Doji’ type of pattern on the daily candlestick charts on Monday which signifies indecision among bulls as well as the bears. It is a neutral pattern and if Nifty closes with a big down bar then chances of further consolidation cannot be ruled out.
On the options front, maximum Put OI was seen at strike process 9,800 followed by 9,500 while maximum Call OI was seen at strike prices 10,000 followed by 9,900. Hence, the range for expiry is between 9800 and 10,000.
“The Nifty has to cross and hold above immediate hurdle of 9,928-9,950 zones to witness an up move towards 10020 and 10050 while a hold below 9880 could drag it towards 9,820 and then towards 9,775,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
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