Nifty continued its downtrend for the fifth consecutive session and closed below the psychological level of 11,300 on July 24 amid mixed results, and after IMF lowered GDP growth forecast for 2019.
The index has finally broken 200-day exponential moving average, which is placed at 11,297 and formed bearish candle on the daily scale, ahead of expiry of July derivative contracts tomorrow.
"As long as this index trades below 11,297, the possibility of retesting the lows of 11,108 registered on May 14, from where this entire upmove unfolded, remains high. In fact, the present corrective structure may also get culminated below the said lows from where some stability can be expected," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, said.
He advised traders not to initiate fresh shorts at this juncture owing to risk of short-covering rally on expiry session.
According to Mazhar Mohammad, some relief for bulls can be expected on a close above 11,360. For time being, it looks prudent on the part of traders to refrain from creating directional bets on the index.
Maximum Put open interest (OI) is at 11,300 followed by 11,200 strike while maximum Call OI is at 11,400 followed by 11,300 strike.
Significant Put writing is at 11,150 and 11,250 strike while Call writing is at 11,300 followed by 11,350 strike. Options data suggests a shift in the lower trading range between 11,200 and 11,400.
India VIX fell by 4.99 percent to 12.76 level.
Bank Nifty continued its weakness for the fifth consecutive session and drifted towards 28,871. The index lost 175.85 points to 28,952.25 and formed a bearish candle on the daily scale as selling pressure was intact.
"It is forming lower highs - lower lows from the last five trading sessions. Resistances are gradually shifting lower and now till remains below 29,350, weakness could continue towards its next support of 28,888 then 28,550 while on the upside, major hurdles are seen at 29,350 then at 29,500," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.