The Nifty50 overcame a flat opening to close in the green for the sixth consecutive day on August 28 but failed to hold on to day’s high of 11,686.
Marginal profit-taking pushed the index below 11,600 during the day, however, it recovered to close 88 points higher at 11,647.
The index started the first day of the September series on a positive note. The index posted the best week in the month of August to hit a fresh six-month high.
Experts say the momentum is likely to continue and traders should look for an initial target of 11,900 but it is vital that the index sustains 11,589.
“Despite the vibrant move witnessed in the Nifty50, which was primarily driven by financials, the broader market appears to have undergone profit-booking as revealed by negative advance-decline ratio,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Interestingly, inside this channel, there seems to be a possible resistance initially around 11,735 levels and once this hurdle is conquered, then the decks will be cleared for bigger targets placed between 11,900–12k levels,” he said.
It is critical that Nifty sustains above 11,589 levels. Therefore positional traders who are still long on the Nifty can continue to hold with a stop below 11,589 on a closing basis.
India VIX fell by 2.92 percent at 18.34 levels. Volatility continues to cool, which suggests a bullish stance and buy-on-decline strategy may continue in the market.
Since it is the beginning of the September series, the options data is scattered at various strikes. The maximum Put OI is placed at 11000 followed by 10500 strikes, while maximum Call OI is placed at 12000 followed by 11500 strikes.
“We have seen marginal Call writing in 12,000 and 11,900 strikes while Put writing is seen at 11,000 then 11,600 strikes. Options data suggests a shift in a higher positional trading range in between 11200 to 12000 zones,” Chandan Taparia, Motilal Oswal Financial Services Limited told Moneycontrol.
“The major trend and momentum of the index is positive to commence the next leg of the rally. Now, it has to continue to hold above 11,500 zones to witness an up move towards 11750 then 12,000 zones while on the downside medium-term support shifts at 11400-11350 zones,” he said.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.