Indian market closed in the red for the third consecutive day in a row on October 30 pushing the Nifty50 index below 11,700-11,650 levels. The index formed a bearish candle on the weekly charts.
The Nifty50, which started on a flat-to-positive note, failed to hold onto the momentum and quickly turned negative. The index bounced back from its 50-Days Exponential Moving Average and faced resistance near 5-Days EMA.
The index finally closed 28 points lower at 11,642. It rose to an intraday high of 11748, and an intraday low of 11,535. On the weekly basis, the Nifty50 fell by more than 2 percent.
Experts are of the view that it is critical for the Nifty50 to hold on to 50-Days EMA for the bulls to regain control. A close below Friday’s intraday low could take the index towards 11,000, while on the upside resistance is seen at 11,750.
“In line with our projections, Nifty50 recoiled after testing its 50-Day simple moving average (11549) before signing off the session with Doji kind of indecisive formation but a strong bearish candle is visible on weekly charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“As of now there seems to be critical support around 11500 levels on weekly charts and a close below which can significantly damage the medium-term trend with initial targets placed around 11000 levels,” he said.
On the upside, if in case Nifty manages to stabilise and bounce back from current levels then the initial hurdle is placed around 11750 levels clearing which can extend the strength further to 11850 levels.
Mohammad further added that considering high volatility traders are advised to remain neutral for next session by shifting their focus to stock specific opportunities with tight stops.
India VIX moved up by 3.05 percent from 24.02 to 24.75 levels. Volatility is moving upwards from the last four consecutive weeks and needs to cool down for market stability ahead of the US election.
Options data is scattered at various strikes. Maximum Put OI is at 11000 followed by 11500 strikes, while maximum Call OI is at 12000 followed by 12500 strikes.
“We have seen marginal Call writing in 11600 and 12000 strike while Put writing is seen at 11200 then 11300 strikes. Options data suggests a wider trading range in between 11200 to 12000 zones,” Chandan Taparia
Vice President | Analyst-Derivatives of Motilal Oswal Financial Services Limited said.
Taparia further added that the index has to cross and hold above 11750-11777 zones to get the bull’s grip for a bounce towards 11900 then 12020 while on the downside major support exists at 11550-11500 zones
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