The Nifty 50 remained volatile throughout the session on September 29, though it tested the crucial 11,300-mark intraday, and finally closed flat with a negative bias as bulls took a breather after a two-day rally.
The index formed a bearish candle on the daily charts as closing was lower than opening levels.
Experts expect further weakness if the index breaks 11,180 levels in the coming session, while on the upside, 11,300 is expected to remain crucial for a rally.
For now, Mazhar Mohammad of Chartviewindia.in advised positional traders to refrain from creating long positions on dip whereas intraday traders can short below 11,180 for a modest target of 11,100 levels with intraday high as a stop loss level.
The Nifty50 opened higher at 11,288.60 and hit an intraday high of 11,305.40 in the initial few minutes of trade, but gradually wiped out all gains and slipped into the red to touch the day's low of 11,181 in the afternoon. The index rebounded in last hour of trade but failed to hold on to gains. It finally settled at 11,222.40, down 5.10 points.
"Inline with our expectations Nifty50 appears to have witnessed profit booking as it tested 50-day simple moving average, whose value is placed around 11,304 levels, before signing off the session with a bearish candle. Hence, in next trading session, weakness can be expected if this counter trades below 11,180 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
Weakness can get expanded initially towards the bullish gap zone of 11,099 – 11,072 levels and defending this zone is critical for bulls to retain bullish bias as a close below 11,070 can be considered as an initial sign of strength for bears, according to him.
Contrary to this, if the Nifty sees strong closing above 11,300 then it can bring back bulls with a initial target of 11,413 levels.
India VIX moved up by 1.05 percent from 19.57 to 19.77 levels, but remained below 20 mark which gives some comfort for a bounce back move in the market.
On option front, maximum Put open interest was at 10,500 followed by 11,000 strike, while maximum Call open interest was at 11,500 followed by 12,000 strike. Marginal Call writing was seen in 11,300 and 11,600 strike while Put writing was seen at 10,500 then 10,900 strike.
Abovementioned option data suggested a wider trading range for the Nifty at 10,700-11,500 levels and an immediate trading range at 11,000-11,400 levels.
Bank Nifty opened positive at 21,770.90 but started underperforming from its opening tick and drifted lower towards 21,300, to hit an intraday low of 21,280.60.
The index closed 254.20 points or 1.17 percent lower at 21,411.30 and formed a bearish candle on the daily charts.
"The index continued the formation of higher highs - higher but a hold below 21,250 zone could give pressure to again revisit key support of 21,000 then 20,750-20,500 levels while on the upside, hurdles are seen at 21,750 then 22,222," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.
Positive setup was seen in Mindtree, Hindalco, Muthoot Finance, UltraTech Cement, Hero MotoCorp, TCS, Titan, Balkrishna Industries, Escorts and Siemens while weakness was seen in BHEL, PNB, Bank of Baroda, UPL, HUL and Indraprastha Gas, he said.