Chandan Taparia of Motilal Oswal said Nifty index managed to give a consolidation breakout with strong momentum on last trading sessions and now a follow up buying suggests that bulls are back on track.
The Nifty50 after a strong start above 11,000 levels remained rangebound with a positive bias throughout the session on Wednesday and closed at one-month high on follow-up buying. Select banking & financials, FMCG and IT stocks led the market higher.
The index closed higher for third consecutive session and formed a bullish candle on the daily charts.
The index ends above 11,000 levels for the first time since February 7, 2019, but sustaining above the same can be a litmus test for bulls to register a sustainable rally going forward with bigger targets, experts said.
The Nifty50 opened sharply higher at 11,024.85 and remained in a positive terrain amid volatility throughout the session. The index touched an intraday high of 11,062.30 and low of 10,998.85, before closing 65.50 points higher at 11,053.
"Nifty50 continued its positive move but traded, through out the day, in a narrow rang of around 60 points before signing off the session with a small bullish candle which can be a cause for concern about next day’s move. Hence, it looks inevitable for this index to sustain above 11,000 levels on closing basis for couple of sessions going forward," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said another two sessions of strong close above 11,000 shall instill more confidence among bulls to register a sustainable rally towards 11,400 kinds of levels.
According to him, short term traders can ride this rally by placing a stop below today's marginal gap present in the zone of 10,998–10,995 kinds of levels.
In simple words traders should close their positions on a close below 10,990 levels, he said.
In next session if Nifty manages to get past and sustain above 11,062 levels then it can initially make an attempt to test recent swing high of 11,118 levels, Mazhar feels.
India VIX fell by 0.32 percent to 15.61 levels. Now, VIX has to continue to hold below 16-15 zones to get the smooth ride in the market.
On option front, maximum Put open interest (OI) is at 11,000 followed by 10,800 strike while maximum Call OI is at 11,500 followed by 11,000 strike.
Meaningful Put writing is at 11,000 while Call writing is at 11,400 followed by 11,300 strikes.
Experts said Option band signifies a trading range in between 10,888 to 11,200 zones.
"Nifty index managed to give a consolidation breakout with strong momentum on last trading sessions and now a follow up buying suggests that bulls are back on track," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited said.
Now it has to continue to hold above 10,985 zone to extend its move towards 11,118 then 11,200 zones while on the downside support exists at 10,929 then 10,888 zones, he added.
Bank Nifty closed 71.60 points higher at 27,625.65 and formed a Doji candle on daily scale as it remained dull after the strong momentum of last session."It closed near to its opening zones but dips was bought which indicates overall positive bias in this sector," Chandan said, adding now it has to continue to hold above 27,350 zone to witness an upmove towards 27,750 then 28,000 zones while on the downside support exists at 27,150 then 27,000 zones.