Mazhar advised traders to remain positively biased and should create fresh long positions with a stop below 10,600 on closing basis and look for initial targets placed around 10,890 kind of levels.
Bulls staged smart come back on Wednesday after falling in last eight consecutive sessions. The Sensex rallied more than 400 points while the Nifty50 closed above 10,700 levels and formed bullish candle on the daily charts.
The sharp bounce back took place after forming bottom around 10,600, which is the similar bottom formed in January when the market had rallied over 11,000 levels.
Considering the current environment, the market is unlikely to cross 11,000 immediately, but 10,900 could be possible, experts said.
The Nifty50 started off trade on a strong note at 10,655.45 and remained around these levels with some volatility as the day progressed. The index gained more strength in late trade and hit an intraday high of 10,752.70. It closed 131.10 points higher at 10,735.50.
"It was heartening to see bulls staging a strong comeback as Nifty50 registered a decent bullish candle and appears to have posted a near term bottom around 10,585 levels which is also interestingly similar to the lowest point from where a rally was unfolded in last January," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said as multiple technical parameters including Elliot wave counts on lower time frame charts are hinting at a multi-day rally from these lows as one corrective structure appears to have culminated at recent low of 10,585 levels which can eventually take the indices towards 10,900 levels.
Besides, some momentum oscillators are already in buy mode with a double bottom kind of formation around 10,585 levels, he added.
Hence, Mazhar advised traders to remain positively biased and should create fresh long positions with a stop below 10,600 on closing basis and look for initial targets placed around 10,890 kind of levels.
India VIX moved down by 7.66 percent to 17.06 levels. Now, VIX needs to cool off below 16.50-16 zones to get the short term stability in the market.
On option front, maximum Put open interest (OI) is at 10,400 followed by 10,700 strike while maximum Call OI is at 11,000 followed by 10,800 strike.
Meaningful Put writing is at 10,600 followed by 10,700 strike while Call unwinding is at all the immediate strikes.
Option band signifies a trading range between 10,600 to 10,900 zones, experts said.
"The Nifty index formed a bullish candle on daily scale which indicates that some buying was seen at lower levels. Now it has to surpass and hold above 10,750-10,777 zones to extend its gains towards 10,820 then 10,888 zones while on the downside support is seen at 10,580 zone," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Bank Nifty opened positive and managed to hold its gains for the entire trading session. The index closed at 26,955.50, up 270.65 points from previous settlement and formed an Inside Bar on a daily scale which suggests that follow up is missing on either side."Now it has to surpass and sustain above 27,000 zone to extend its gains towards 27,250 and then 27,500 zone while on the downside supports are seen at 26,850 and then 26,666 zone," Chandan said.