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Last Updated : Aug 11, 2020 06:53 PM IST | Source: Moneycontrol.com

Technical View: Nifty again forms Doji candle but bulls in control, target seen at 11,450

The consistent fall in volatility also indicates that the bulls are in a strong position. India VIX fell by 5.11 percent to 21.36 levels.

Sunil Shankar Matkar

The Nifty50 stayed higher throughout the session despite volatility and closed above the 11,300-mark on August 11 backed by banking & financials and metals.

Positive global cues amid hopes of another fiscal stimulus from the United States and the registration of first coronavirus vaccine in Russia lifted sentiment.

Close

The index closed half a percent higher but the closing price was almost near opening levels that saw the index make Doji pattern on daily charts.

A Doji candle indicates there is some indecisiveness among the bulls and the bears and bounce were being sold in the absence of follow-up buying interest.

Given that the bulls were in control for the sixth consecutive day, the Nifty can go past 11,400 levels soon, say epxerts.

The consistent fall in volatility also points to the bulls being in a strong position. India VIX fell by 5.11 percent to 21.36 levels.

As risk-reward ratios doesn't seem to be favourable for a long-side index trade, traders are advised to remain on sidelines by shifting focus on stock-specific opportunities, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

The Nifty50 witnessed gap up opening at 11,322.25 and hit an intraday high of 11,373.60, while its intraday low was 11,299.15. The index closed at 11,322.50, up 52.30 points.

The Nifty50 saw a 73-point trading range before signing off with a Doji for fifth day in a row. “This kind of narrow intraday trading range without meaningful gains but with indecisive formations can be suspected as a distribution phase on completion of which a bigger and swift correction can unfold on the bourses," Mohammad said.

But, as of now, technical parameters are mixed and are not hinting at a correction except the price chart. Hence, if the positive bias continues, then the bulls can slowly push towards the 11,450-mark, he said.

If the index closes below 11,299, then it can be considered as an initial sign of weakness which can drag the Nifty to 11,142 but eventual downside target remaind below 10,882, he added.

Options data indicates the same trading range for the Nifty at 11,000-11,500 for the next few days.

Maximum Put open interest was at 11,000 followed by 10,000 strike, while maximum Call open interest was at 11,500 followed by 12,000 strike. Minor Call writing was seen at 11,700 and 11,800 strike while Put writing was seen at 11,000 then 11,300 strike.

The Bank Nifty opened positive and remained consolidative for most part of the session with its upmove towards 22,250 levels. It outperformed the benchmark index, closing 326.95 points higher at 22,227.20 and formed a bullish candle on the daily scale.

"Mechanical indicators have given a bullish crossover and requires follow-up buying to confirm the next momentum. Now it has to hold above 22,000 levels to witness an upmove towards 22,500 then 22,750 zones, while on the downside immediate support is seen at 21,750 then 21,500 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Positive setup was seen in Axis Bank, JSW Steel, Jindal Steel, ITC and BPCL while weak structure was seen in Shree cement, Titan, UPL, Cipla, and Bharti Airtel, he added.
First Published on Aug 11, 2020 05:10 pm
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