The Nifty50 started off the week on a positive note and traded strong throughout the session to end at the highest levels in last two months driven by across the board buying. Auto, metals, and pharma stocks gained the most.
The index formed Doji kind of pattern on the daily charts as the closing was near its opening levels. A Doji candle indicates there is some indecisiveness among the bulls and the bears and bounces were being sold in the absence of follow-up buying interest.
Considering the narrow trading ranges, Mazhar Mohammad of Chartviewindia advised traders to avoid Nifty trades by shifting focus towards stock specific opportunities.
The falling volatility also played supportive role for the market. India VIX fell by 2.86 percent from 20.82 to 20.22 levels.
The Nifty50 opened gap up at 14,928.25 and traded higher throughout session to hit an intraday high of 14,966.90. The index was up 119.20 points to close at 14,942.40.
"Albeit Nifty50 marched ahead with a mild gap up opening, at the end of tne day, it registered a Doji kind of indecisive formation. Moreover, trading range for the day remained extremely narrow inside 70 points which was lesser than preceding session’s 93 points range hinting at weakening momentum on the upward journey. These kind of back to back narrow sessions will result in sudden reversals as is evident from the historical price behaviour," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
Unless Nifty registers a strong close above 15,045 levels, with a large bullish candle, a sustainable upswing shall not be expected, he feels.
Meanwhile, to retain the bullish bias, Nifty needs to sustain above today's minor bullish gap area present between 14,892 – 14,863 levels as close below 14,860 can be considered as an initial sign of weakness, he said.
On option front, maximum Put open interest was seen at 14,000 followed by 13,500 strike while maximum Call open interest was seen at 15,000 followed by 15,500 strike. Call writing was seen at 15,700 and 15,400 strike while Put writing was seen at 14,000 then 14,500 strike.
Option data indicated that the Nifty could see an immediate trading range of 14,800 to 15,100 levels for coming sessions.
Bank Nifty opened gap up at 33,175.30 and moved in a consolidative manner with a hold above 33,000 levels. It formed a Doji candle along with a narrow trading zones of 250 points on daily scale while continues its higher highs – higher lows formation of the last three sessions.
"Bank Nifty has to hold above 33,000 to witness an upmove towards 33,333 and 33,500 while on the downside support is seen at 32,750 and 32,500 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On stocks front, bullish setup was seen in BHEL, NMDC, Torrent Power, Coal India, UPL, Tata Power, NALCO, Motherson Sumi, Hindalco, Torrent Pharma, Glenmark Pharma, Tata Motors, Vedanta, L&T, Cadila Healthcare, Aurobindo Pharma, Tata Steel, Sun Pharma, GAIL, NTPC, Divis Labs, BPCL and Wipro while weakness was seen in PNB, Dabur, Britannia Industries, Ramco Cements, Infosys and HCL Technologies, he added.