The Nifty50 after volatility gained strength in the last hour of trade and closed higher on July 7. But experts feel the major strength is possible only if the index sustains above 15,915 levels.
The index formed a bullish candle with a long lower shadow on daily charts, which indicates that declines were being bought, as the closing was higher than opening levels.
India VIX continued to trade around 18-month lows, falling by 0.55 percent from 12.27 to 12.21 levels.
Mazhar Mohammad of Chartviewindia.in advised traders to wait for signs of strength, which will emerge when Nifty sustains above 15,915 levels, before going long.
The Nifty50 started off flat at 15,819.60 and remained volatile for a major part of the session before seeing strength in late trade. The index closed 61.40 points higher at 15,879.70 after hitting a day's high of 15,893.55 and low of 15,779.70.
"Albeit Nifty50 closed in a positive terrain, major move in upward direction shall not be expected unless it registers a clear cut breakout above 15,900 levels on closing basis as the trend right now is sideways. Essentially sideways phases mean indices alternate or vacillate between positive and negative territories," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
He said the market participants should not be surprised if they see a negative trend in the next session which will be materialised if Nifty trades below 15,779 levels.
In that scenario, on intraday basis, weakness shall initially get extended towards 15,730 levels and a close below that may further strengthen the bearish sentiment with targets of 15,600 levels, according to him.
Contrary to this, if Nifty50 closes strong above 15,900 then it shall eventually extend the strength towards 16,300 levels.
Option data indicated that the Nifty50 could see an immediate trading range of 15,700 to 16,000 levels in coming sessions.
On the option front, maximum Put open interest was seen at 15,500 followed by 15,000 strike while maximum Call open interest was seen at 16000 followed by 16,500 strike. Minor Call writing was seen at 16,000 then 16,200 strike while Put writing was seen at 15800 then 15700 strike.
Bank Nifty opened slightly negative at 35,550.60 but strength in banking stocks took the index near its previous day's high levels. It has been outperforming the broader market from the last two sessions and finally closed with gains of 192.10 points at 35,771.30.
The index formed a bullish candle on daily scale and closed above its previous hurdle levels. "It has to hold above 35,750 levels to move up towards 36,000 and 36,250 levels while on the downside support is seen at 35,500 and 35,250 levels," said Chandan Taparia., Vice President, Analyst-Derivatives at Motilal Oswal Financial Services.
He further said, on stocks front, bullish setup was seen in NALCO, Bharat Forge, RBL Bank, Tata Steel, Berger Paints, JSW Steel, Colgate Palmolive, Bajaj Finserv, InterGlobe Aviation, Muthoot Finance, Shriram Transport Finance, Pidilite Industries, Tata Chemicals, Ambuja Cements, IndusInd Bank, Marico, Bharat Electronics, SBI and HDFC while weakness was seen in Titan, Aurobindo Pharma, Sun TV Network, Siemens, Maruti and Voltas.