Mazhar Mohammad of Chartviewindia.in advised traders at this juncture to take a neutral stance and should refrain from creating fresh short positions.
Bears continued to dominate Dalal Street for seventh consecutive session on Monday. The Nifty50 opened flattish and remained under pressure throughout the trading session to settle below 10,650 levels.
The index continued to form bearish candle on the daily scale.
It has key support levels of around 10,610-10,583, experts said, adding if those levels get broken, then the near term trajectory appears to be down with a target of 10,380 kinds of levels.
The Nifty50 opened flat with a positive bias at 10,738.65 and hit an intraday high of 10,759.90, but immediately slipped into red to trade lower for rest of the session and touched a day's low of 10,628.40. The index closed down 83.40 points at 10,641.00.
"Nifty50 registered a strong bearish candle to sign off the first session of the week. In this process index appears to have witnessed a fresh breakdown as it settled below its critical support of 10,650 which Nifty50 defended on closing basis since last December on multiple occasions," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said unless it swiftly recovers and trades above 10,785 levels the near term trajectory appears to be down with a target of 10,380 kinds of levels.
Considering the relentless fall from the highs of 11,118 levels a bounce can't be ruled out going forward, he added.
Hence he advised traders at this juncture to take a neutral stance and should refrain from creating fresh short positions.
India VIX moved up sharply by 10.40 percent to 18.17 levels. Sudden upside in the VIX restricts immediate upside in the near term.
On option front, maximum Put open interest (OI) is at 10,700 followed by 10,400 strike while maximum Call OI is at 11,000 followed by 10,800 strike.
Put unwinding is at 10,600 followed by 10,500 strike while Call writing is at 10,700 then 10,800 strike.
Option band signifies a lower shift in the trading range in between 10,550 to 10,850 zones, experts said.
"Nifty Index formed an Inside Bar as it traded in the previous day's range but supply pressure is intact at higher levels. Now till it holds below 10,750 zones it can slip towards 10,580 then 10,500 zones while on the upside hurdle is seen at 10,777 then 10,800 levels," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty has broken is crucial support of 26,666 zones and been making lower highs - lower lows from last seven trading sessions.
The index failed to surpass above 26,850 levels and closed 140 points lower at 26,654.25. It formed a bearish candle on daily scale as supply pressure is visible at higher levels."Now till it holds below 26,850 zones it could drag towards 26,400 then 26,250 zones while on the upside hurdle is seen at 26,850 then 27,000 zones," Taparia said.