The index witnessed profit-taking at higher levels near 5-day EMA but found support near 10,800 levels.
Indian markets remained volatile throughout the trading session and closed with marginal gains on September 5. The Nifty made a doji pattern on the daily charts.
The index witnessed profit-taking at higher levels near 5-day exponential moving average but found support near 10,800 levels. The index finally closed with marginal gains of 3.25 points to 10,847.
The formation of a doji candle after a bullish candle indicates there is some indecisiveness among the bulls as well as the bears.
Analysts advise investors to wait for either a breakout above 11,042 or a breakdown below 11,746 before initiating fresh positions.
“Albeit Nifty50 witnessed a strong opening, but it met with intraday selling pressure in the first hour itself. It consolidated in a narrow range of around 40 points in the next 3 hours which resulted in a doji kind of formation,” Mazhar Mohammad, Chief Strategist, Technical Research and Trading Advisory, Chartviewindia.in, told Moneycontrol.
“In the next trading session, if index pulls itself beyond 10,920 levels then some intraday strength can be expected. However, to strengthen bullish sentiment a close above 11,042 levels is required, and on the downsides, 11746 continues to remain critical support,” he said.
Mohammad further added that a breach of 11,746 could catapult the trend in favour of bears, with initial targets around 10,550. For the time being, traders are advised to wait for some signs of strength before going long in the Nifty.
On the options front, maximum put OI is placed at 10,800, followed by 10,600 strikes, while maximum call OI is seen at 11,200 followed by 11,700 strike.
Call writing was seen at 11,000, followed by 10,900 strike, while put writing was seen at 10,800 and 10,600 strikes. Option data suggests a trading range of 10,600 to 11,200.
The Bank Nifty formed an inside bar on the daily scale, as it traded in the range of the previous day’s candle. It managed to negate the formation of lower lows after five trading sessions but supply pressure is seen at higher levels.
“The index needs to hold above 27,000–27,150 zones to witness a bounce towards 27,350 then 27,500 zones, while on the downside, major supports are seen at 26,650 then 26,500 levels,” said Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.“The Nifty needs to hold above 10,800 zones to witness a bounce towards 10,950 then 11,000 zones, while on the downside supports are seen at 10,750 then 10,700 levels,” it said.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .