On a volatile day of trading, the Nifty50 went past 14,000, a new milestone, during the day but slipped to sign off the December F&O contracts expiry day on a flat note.
The index formed a Doji indecisive pattern on the daily charts as the closing was near the opening levels but continued making higher lows as supports gradually shifted higher. The index gained 8 percent in December and formed a big bullish candle on the monthly charts.
Experts said the index needs to surpass and hold 14,000 to show strength in the coming sessions or consolidation may continue for some more days.
For the time, traders with a high-risk appetite should short below 13,930 levels and look for a modest target of 13,820 with a stop above intraday high, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
The Nifty50 opened lower at 13,970 and remained volatile the whole day. The index hit an intraday record high of 14,024.85, and a low of 13,936.45 before closing the session at 13,981.80, down 0.20 point.
"The Nifty50 continued its indecisive formation even on monthly expiry session as the index remained inside the trading range of 88 points before signing off the session with a negative close after trading marginally above 14,000 levels with new life-time highs," Mohammad said.
"Our twin momentum oscillators also triggered a sell signal post today's negative close. Hence, going forward we expect the market either to consolidate or correct in the next couple of trading sessions. Intraday weakness shall be expected, if the Nifty trades below 13,936 levels in the next trading session, while slightly bigger downside target shall be expected on a close below 13,796 levels," he said.
However, as momentum and liquidity both favour the bulls, if the Nifty sustains above 14,000 in the next session then it may expand its strength towards 14,200 levels, he said.
India VIX fell marginally by 0.07 percent from 21.11 to 21.09. "Rising volatility needs to cool down below 20-19 levels to support the bullish market setup with a higher market base," said Chandan Taparia of Motilal Oswal.
Since it is the beginning of new series, options data is scattered at different strikes. Maximum Put open interest was seen at 13,000 followed by 13,500 strike, while maximum Call open interest was at 14,000 followed by 14,500 strike.
Options data indicates that the Nifty could be in a wider trading range of 13,500-14,500 in the coming sessions.
The Bank Nifty opened flat at 31,295.90 and continued its southward movement to hit the day's low of 31,088. It remained consolidative but recovered from lows to settle the day with a loss of 39 points at 31,264.
The index formed a small bearish candle on the daily scale but continues its higher-low formation of the last six sessions, while for December, there was a bullish candle on the monthly charts.
"The Bank Nifty has to continue to hold above 31,000 to witness an upmove towards 31,500 and 31,750, while on the downside, support is seen at 30,800 and 30,500," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
A positive setup was seen in SAIL, Bharat Electronics, Jubilant Foodworks, Motherson Sumi, UBL, Havells, Pidilite Industries, HDFC, Divis Labs, Asian Paints, Titan and SRF, while weakness was seen in TCS, Amara Raja Batteries and ITC, he added.