Chandan Taparia of Motilal Oswal Financial Services said now the index has to continue to hold above 10,750 zones to extend its move towards 10,888 then 10,929 zones.
The Nifty50 managed to settle the volatile expiry session as well as February series marginally lower on Thursday. Weak global cues weighed on the market sentiment, but hope of unlikely escalation of geopolitical tensions between India and Pakistan limited downside.
The index formed bullish candle which resembles a 'Bearish Belt Hold' kind of pattern on the daily charts.
A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the trading day making up for the large body. The candle will either have a small or no upper shadow and a small lower shadow.
No meaningful damage in last few sessions amid geopolitical tensions hinted that bulls may be ready to take the Nifty higher, but that could be possible after consolidation in coming few sessions, experts said.
The Nifty50 opened sharply higher at 10,865.70, which was also an intraday high, but immediately fell and remained rangebound between 10,785 to 10,850 zones for rest of the February settlement day. It closed 14.20 points lower at 10,792.50 on February 28 and lost 0.4 percent in February series.
"Nifty50 registered a 'Bearish Belt Hold' kind of formation as it remained under pressure from the word go," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said despite uncertainty surrounding the market, bulls appears to have put up a brave face as there was no meaningful price damage in the last 3 sessions as Nifty almost closed flat around 10,800 kinds of levels all these days.
Moreover, last three sessions of price action is looking like a mere pause inside the ongoing upswing from the lows of 10,585 levels, he added.
Hence, the market can be expected to pick up momentum on the upside once it manages a strong close above 10,900 kinds of levels and in such a scenario presuming a sustainable breakout above the said resistance level the current upswing can as well eventually extend towards 11,100 levels, according to him.
Mazhar said in between, it looks inevitable for Nifty to sustain above 10,729 levels to retain positive bias and traders are advised to focus on stock specific opportunities as long as Nifty trades above 10729 on closing basis below which it can come under renewed selling pressure with a initial target of 10,645.
India VIX fell by 3.29 percent to 18.27 levels.
Experts said VIX has to cool down below 16-15 zones to get the smooth ride in the market else restricted upside could continue to keep pressure on the market.
Since it is the beginning of new series Option data is scattered at various strikes. Maximum Put open interest (OI) is 10,600 followed by 10,700 strike while maximum Call OI is at 11,000 followed by 10,900 strike.
Put writing is at 10,300 followed by 10,600 strike while Call writing is at 11,000 then 10,900 strike.
Option band signifies a broader trading range of the February series in between 10585 to 11118 zones and requires a range breakout to start the next leg of rally, experts said.
"Nifty index formed a bearish candle on daily scale but managed to hold its crucial support of 10,777-10,750 zones. It has got stuck in a trading range and follow up action is missing on both the sides as dips are being bought while bounce is being sold in the market," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited said.
Now the index has to continue to hold above 10,750 zones to extend its move towards 10,888 then 10,929 zones while on the downside support exists at 10,720 then 10,650 levels, he added.
Bank Nifty failed to hold above 26,900 zone and comparatively traded in a narrow range of 150 points for most part of the session. It managed to hold previous day low but formed a small bearish candle on daily scale.
The index got stuck in between 26,666 to 27,200 zones since last 12 trading sessions. It closed at 26,789.90, down 9.40 points from previous settlement."Now it requires a decisive range breakout from the current trading band to commence the next leg of momentum. On immediate basis it has to hold above 26,850 to witness an upmove towards 27,150 then 27,350 zones while on the downside major support exists at 26,666 then 26,400 zones," Chandan Taparia said.