After remaining range-bound for the most part of the day, the Nifty gained strength in the last couple of hours to close a percent higher on November 26, the day of November futures & options contracts expiry. It was a smart rebound after a day of 1.5 percent correction, indicating declines were being bought.
Buying was seen across sectors but banking & financials, metals and pharma stocks saw heightened interest. The index formed a bullish candle on the daily charts as closing was higher than the opening level.
The Nifty continued to defend the 12,800-mark. Experts expect the range-bound trade to continue in the coming days, unless the index crosses its earlier record high of 13,145.
Considering the strong appetite of the bulls at lower levels, it is advisable to refrain from shorting but before going long, it would be prudent to wait and watch one more trading session, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
The Nifty50 opened higher at 12,906.45 but remained rangebound. It touched an intraday low of 12,790.40 and high of 13,018, before signing off the session with 128.60 points gain at 12,987.
"Strong comeback by the bulls, without a follow through on the downside to the last Wednesday's sharp cut, is hinting that market may be chalking out a new trading range between 13,145 and 12,750 levels. Moreover, 100 points recovery of the Nifty in the last 30 minutes can also be owing to expiry related factors. Hence, unless Nifty closes above 13,145 levels in the next session, the trend shall continue to remain sideways in the above-mentioned trading range," Mohammad said.
If the Nifty manages to get past 13,145 on a closing basis then traders should play on the long side for a possible target of 13,500, he said.
India VIX was down by 12.53 percent from 23.12 to 20.22 levels, which also supported the momentum.
Since it is the beginning of a new series, options data is scattered at different strikes. Maximum Put open interest was at 12,000 followed by 11,500 strike while maximum Call open interest was at 13,000 followed by 13,500 strike.
Options data indicated that the Nifty could see a wider trading range of 12,500 to 13,500 levels in the coming days.
The Bank Nifty opened positive at 29,370.40 and corrected till 28,923.10 but a smart recovery of more than 650 points from lower zones on the monthly expiry day pushed the index to an intraday high of 29,623.
It remained quite volatile but concluded the session with the gains of 353.40 points, or 1.21 percent, at 29,549.80 and formed a bullish candle on the daily scale.
"The Bank Nifty has been forming alternative bullish and bearish candle for the last seven trading sessions. Now it has to hold above 29,200 to witness an upmove towards 30,000 then 30,300 levels while support is seen at 29,000 and 28,800," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Positive setup was seen in Siemens, JSW Steel, Jindal Steel & Power, L&T Finance Holdings, Grasim, Bank of Baroda, REC, Tata Chemicals, Manappuram Finance, PFC, Bharat Forge, Canara Bank, Bajaj Finance, Hindalco, NMDC, Bata and Cummins India while weakness was seen in InterGlobe Aviation, Maruti, Havells and Pidilite Industries, he added.