Technical View: Nifty closes above 11k to form Doji candle, bulls may push index to 11,250

The Nifty50 started off the week on a strong note and closed above the psychologically important 11,000-mark for the first time since March 6 as the bulls remained in control on July 20 despite rising coronavirus infections.

The sentiment has remained positive after a good showing by Britannia, HDFC Bank and technology stocks in the June quarter.

The index closed near its opening level and formed a Doji pattern on daily charts, which is a cause of concern as there could be consolidation before any further move, experts say.

The Nifty is facing resistance at every 100 points on the upside, so traders should look at booking profits in the next session rather than creating fresh longs at current levels, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.

India VIX moved up by 2.29 percent to 24.71 levels.

The Nifty opened higher at 10,999.45 and remained in a positive terrain throughout session to hit an intraday high of 11,037.90 in late trade. The index closed at 11,022.20, up 120.50 points or 1.11 percent.

"Despite registering a strong gap up opening, the Nifty traded in an extremely narrow range of 84 points before signing off the session with an indecisive Doji kind of formation," Mohammad said.

At this juncture, as momentum is in favour of bulls, one should only remain optimistic and look for higher targets placed at around 11,250 unless the Nifty registers a close below 10,867, which may bring back the bears, he said.

In case the Nifty manages to close above 11,250 levels, then the rally should extend into the bearish gap zone of 11,384 – 11,536 registered on February 28, he said.

Options data indicated that the lower band of trading range has shifted higher, hence the immediate trading range for the Nifty could be 10,700 to 11,200.

On options front, maximum Put open interest was at 10,000 followed by 10,500 strike while maximum Call open interest was at 11,500 followed by 11,000 strike. Call writing was seen in 11,500 and 11,400 strikes, while meaningful Put writing was seen at 11,000 and 10,900 strike.

The Bank Nifty opened positive with an upside gap but consolidated in the 250- point range for most part of the session. It gained nearly 350 points, pushed up by HDFC Bank’s impressive Q1 numbers shared over the weekend.

The index rallied 355 points or 1.62 percent to close at 22,321.80 and formed a Doji candle on the daily scale as it closed near its opening levels.

"Now it needs to hold above 22,000 levels to witness an upmove towards 22,500-22,650 then 23,000 while on the downside, supports are seen at 21,800 then 21,500 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.