The index witnessed smart buying but analysts still feel that traders should wait for a breakout or a breakdown before initiating fresh positions.
Bulls continued their dominance on D-Street for the third consecutive day, pushing Nifty above 10,900 levels on closing basis. The index formed a bullish candle on the daily charts on September 6 and a 'Doji' kind of pattern on the weekly scale.
The index also reclaimed two crucial short term moving averages i.e. 5-days exponential moving average (EMA), and 13-EMA. However, it witnessed some resistance near its 20-days EMA around 10,958.
The index which opened at 10,883 slipped marginally to hit an intraday low of 10,867. It hit an intraday high of 10,957 before closing the day 98 points higher at 10,946.
The index witnessed smart buying but analysts still feel that traders should wait for a breakout or a breakdown before initiating fresh positions. A break above 11,042 levels could fuel the rally towards 11,141 levels while a break below 10,800-10,746 could fuel further downside.
"Nifty registered a DragonFly Doji kind of formation on the weekly charts, in which opening, high and closing prices are same, as it smartly recoiled from the intra-week low of 10746 levels suggesting possible reversal in favor of bulls in the near term. Hence, as long as the index sustains above 10,746 levels, traders can retain an optimistic outlook. In the next trading session if the index manages to get past 10,967 levels then slowly it can head towards 11042 levels. Similarly, on the downsides it needs to sustain above 10,867 below which intraday weakness can be expected," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
Mohammad further added that confirmation of short term strength in the index may arise on a close above 11,042 kinds of levels which can then facilitate a rally towards 11,141 levels. "For time being positional traders can go long in index with a stop of 10,800 and look for a target of 11,140," he said.
India VIX fell down by 5.76 percent at 16.27 levels. Bank Nifty managed to hold previous day low and gradually extended its gains towards 27,300 levels. It formed a Bullish Candle on a daily scale.
On the options front, maximum Put OI is seen at 10,800 followed by 10,600 strikes while maximum Call OI is seen at 11,500 followed by 11,200 strikes.
Minor Call writing was seen at 11,200 strikes while Put writing was seen at 10,500 and 10,900 strikes. Options data suggests a trading range in between 10700 to 11200 zones.
Nifty managed to hold 10,850 zones and gradually extended its gains towards 10,950 levels."It formed a Bullish candle on the daily scale while Bullish Pin Bar on a weekly scale which implies support based buying interest is seen in the market at lower levels. It has to continue to hold above 10,850 zones to extend its bounce towards 11,050 then 11,111 levels while on the downside supports are seen at 10,850 then 10,780 zones," Chandan Taparia, Associate Vice President, Analyst-Derivatives at Motilal Oswal Financial Services, told Moneycontrol.The Great Diwali Discount!
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