The Nifty 50 reversed gains in the second half of the session to close below its crucial support placed at 11,400 levels on Thursday. It made a bearish candle on the daily candlestick charts.
The index slipped below its 5-exponential moving average (EMA) placed at 11,401, but above 13-EMA placed at 11,349. For the momentum to continue on Friday, the index should stay above 11,366 and climb above 11,400 levels, suggest experts.
Failure of the index to hold above 11,366 which was the intraday low of Thursday, could drag the index towards 11,230 levels, they say.
The Nifty50 which opened at 11,397 rose to an intraday high of 11,449.85. It slipped below 11400 to hit an intraday low of 11,366 before closing at 11,385, down 50 points.
“Lack of follow through to Tuesday’s strong up move is clearly suggesting that Nifty50 is in a consolidation mode in a band of 11,500 – 11,340 levels as it signed off the session on a negative note with a bearish candle which resembles inverted Hammer kind of formation with a long upper shadow,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“On Friday, if the index consistently trades below 11366 levels, atleast for one hour, then selling pressure shall get accentuated further breaching the recent low of 11,340 levels which should result in a bigger damage to the index going forward with a downside target placed around 11,230 levels,” he said.
Mohammad further added that contrary to this any strength on upside shall initially take the indices towards 11,500 mark and unless a fresh breakout is registered above this critical resistance point further upsides shall not be expected.
Bank Nifty formed a Bearish Belt Hold candle and corrected towards 27,779 marks. The index has to hold above 28,000 zones to witness an up move towards 28,128 then 28,333 levels while on the downside it may drift towards 27,650 then 27,440 zones, suggest experts.
India VIX moved up by 2.73 percent at 13.64 levels. On the options front, maximum Put OI is placed at 11,000 followed by 11,200 strikes while maximum Call OI is placed at 11,500 followed by 11,400 strikes.
“We have seen Put unwinding at all the immediate strikes while Call writing is seen at 11,500 and 11,400 strikes. Option band signifies an immediate trading band in between 11,300 to 11,500 zones,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“The Nifty index failed to surpass previous day’s high of 11,450 zones and corrected towards 11,366 levels to close the session with the loss of 50 points. It is finding selling pressure at higher zones while still respecting to its rising support trendline by connecting all the recent swing lows of 10557, 10630, 10946 and 11340 levels,” he said.Taparia further added that if Nifty fails to hold 11,350-11,333 zones then selling pressure could be seen towards 11,300 and then towards 11,250 and 11,171 zones while immediate hurdles are seen at 11,450 and then towards 11,500 zones.