Intraday traders should remain cautious and should consider creating fresh short positions below 11,950 and look for a target of 11,880, with a stop above the intraday high, says Mazhar Mohammad.
The Nifty opened higher only to slip into the red and traded lower through the December 3 session following renewed worries about the US-China trade deal and America opening a new front by restoring tariffs against steel and aluminium imports from Brazil and Argentina.
The index closed a tad below 12,000 and formed a bearish candle on daily charts for the third consecutive session, as the closing value was lower than the opening tick. It also closed marginally below its near-term critical support of 13-day moving average (12,004).
The advance to decline ratio also favoured the bears. Two stocks declined for every single stock that advanced during the December 3 session, hinting at widespread profit booking in the broader markets.
If the index breaks the next crucial support of 11,950, then there could be major selling pressure, say experts.
The Nifty opened higher at 12,067.65, which was also close to the intraday high of 12,068.60, and immediately slipped to trade lower during the session. The index hit the day's low of 11,956.40 in the afternoon and closed 54 points lower at 11,994.20.
"The index shall continue to remain vulnerable for a sell-off unless it shows some signs of strength, which can be expected on a close above 12,068 levels," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
A breach of 11,950 in the next session can initially drag the index down to 11,880, Mohammad said. Some respite in the next session can’t be ruled out, considering that the index is trading near its supports.
He advised intraday traders to remain cautious and consider creating fresh short positions below 11,950 and look for a target of 11,880, with a stop above intraday high.
India VIX rose by 2.55 percent at 14.56 levels.
Maximum Put open interest was seen at 12,000 followed by 11,500 strike, while maximum Call open interest was seen at 12,500 followed by 12,100 strike.
Call writing was seen in 12,200 and 12,300 strike and Put writing at 11,800 strike. The options data suggests that the Nifty could trade in a range of 11,900 to 12,300.
The Bank Nifty continued its formation of lower highs – lower lows from the last three trading sessions and drifted towards its key support zone of 31,500.
The index closed 0.81 percent lower at 31,613.30 and formed a bearish candle on the daily scale, as selling pressure was seen at higher levels but remained in a consolidation phase in the latter half of the session."Resistance are gradually shifting lower and now till it holds below 31,900 level, it could drift towards 31,400 then 31,200, while an immediate high of 32,157 mark remains a major hurdle for the coming few days," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.