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Technical View: Nifty fails to hold 11,800, forms bearish candle again

Traders are advised to remain neutral and focus on stock specific opportunities, Mazhar Mohammad said.

February 25, 2020 / 07:12 PM IST

The Nifty50 opened higher as an attempt to rebound after 2 percent correction seen in the previous session, but turned volatile for the rest of the session and finally settled moderately lower on February 25. Traders/investors remained concerned over the spread of the coronavirus in other parts of the world outside of China, including Italy, Iran, Kuwait, etc.

The index closed a tad below 11,800 levels and formed a bearish candle on daily charts as closing was lower than opening levels.

The Nifty made many attempts to defend 11,800 in the last couple of hours of trade but failed. Also in the same hours period, the index seems to have put up a tough fight to defend its critical support present in the zone of 11,783–11,740 levels as it recoiled after testing the said support twice on intraday charts.

Experts feel if the index fails to hold the said support levels then it could move below 11,700 mark to find 200-day simple moving average which is placed at 11,684 levels.


The volatility cooled off a bit after a sharp rise in the previous session. India VIX fell by 0.60 percent to 16.89 levels.

The Nifty50 after opening higher at 11,877.50 hit an intraday high of 11,883.05, but wiped out all those gains in first half an hour trade and turned volatile for rest of session. The index hit a day's low of 11,779.90 in afternoon and closed 31.50 points lower at 11,797.90.

"There seem to be multiple supports emerging on the downsides at every 50 point decline. In case if Nifty fails to hold 11,749 then it can head to test its 200-day simple moving average support placed around 11,684 levels whereas on the upside mild strength can be expected if Nifty manages a close above 11,900 in next couple of trading sessions which then can pave the way for sideways consolidation," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

At this juncture as both upsides as well as downsides appears to be limited from current levels, traders are advised to remain neutral and focus on stock specific opportunities, he said.

On Options front, maximum Put open interest was seen at 11,800 followed by 11,700 strike while maximum Call open interest was at 12,000 followed by 12,200 strike.

Significant Call writing was seen at 11,900 to 12,200 strikes and Put unwinding was seen at immediate strikes while minor Put writing was seen at 11,800 strike.

Bank Nifty opened marginally in green and remained volatile in a narrow range. For the second consecutive session, it relatively fallen less as compared to the benchmark index and formed a small body candle on daily scale. The index fell 22.40 points to 30,432.70.

"Momentum oscillator RSI is placed negatively on daily scale and showing some weakness in the index. Going forward, the ongoing correction may extend towards 30,250 then 30,000 levels. While major resistance remains intact at 30,700 and then 31,000 zone," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Sunil Shankar Matkar
first published: Feb 25, 2020 04:57 pm
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