Mazhar Mohammad of Chartviewindia.in advised positional traders to short the Nifty if it closes below 10,194 and look for a target of 9,860.
The Nifty50 opened sharply higher but wiped out the gains in the last 90 minutes of trade to close with a moderate loss despite a strong show by other Asian markets on June 30. The Indian market seems to be worried about economic recovery after several states extended lockdown till July 31 as coronavirus cases continue to rise.
The index closed 80 points lower than its opening level and formed a bearish candle on daily charts after two successive days of the Doji formation.
Given the continuous consolidation, the market could be preparing for a breakout on either side from its current range of 10,194-10,550, experts said.
Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in, advised positional traders to short the Nifty if it closes below 10,194 and look for a target of 9,860.
India VIX rose marginally by 0.72 percent to 29.11 levels.
The Nifty50 started off at 10,382.60 and hit an intraday high of 10,401.05 but erased gains in the afternoon trade to hit the day's low of 10,267.35. The index managed to settle above 10,300 levels, down 10.30 points at 10,302.10.
"The Nifty50 continued its lackadaisical style of trading for the fourth session in a row as trading remained in a narrow range of 133 points before signing off the session with a bearish candle," Mohammad said.
With the last four sessions seeing narrow ranges and almost indecisive formations, the Nifty appeared to be positioning itself for a breakout in either of the directions, he said.
The Nifty, he said, is respecting an ascending trendline, which is in progress from the lows of 7,511, whose support is coinciding with lower end of last 4 sessions narrow trading range placed between 10,409 – 10,194 levels.
If the index breaches the trend line support, placed around 10,195 levels, on a closing basis then it can accelerate the selling pressure. In that scenario, a range target close to 9,800 can be projected, he said.
Strength can be expected if the Nifty manages a close above 10,400, he said.
The Bank Nifty opened positive at 21,524.30, but failed to hold above its intraday high of 21,650 and fell towards 21,212 levels, the lowest point of the day.
The index closed at 21,370.20, up 11.20 points, and formed a small-bodied red candle on the daily charts."The Bank Nifty has been moving in between 20,900 to 21,800 levels from the last four trading sessions. It is respecting to its 50-DEMA but the absence of follow up is taking it back to support zones. Now immediate support exists at 21,000 then 20,800 while on the upside, hurdle is seen at 21,800 then 22,000 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.