Indian market witnessed profit-taking at higher levels but still managed to close the day above crucial support levels. The S&P BSE Sensex closed above 46,000 while the Nifty 50 ended above 13,600 on December 11 making a ‘Doji’ candle on the daily charts.
On a weekly scale, Nifty50 formed a bullish candle as the index rallied by about 2 percent for the week ended December 11.
This is the second consecutive day when Nifty 50 formed a Doji kind of candle which suggests indecisiveness among the bulls as well as the bears. For bulls to take control, a break above 13,600 is required, suggest experts.
For time being traders shall remain neutral and look to short only on a close below 13,400 levels, they say.
The Nifty50 which opened above 13,500 levels hit a fresh record high of 13,579. Bears pushed the index towards 13400 before closing the day at 13513.
“Bulls continued their buy on dip kind of strategy owing to which Nifty smartly recoiled from the intraday low of 13402 levels which resulted in a Doji kind of formation for the second day in a row,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“However, on weekly charts a moderately bullish candle with the trading range of 378 points. Nevertheless back to back Doji’s can be an indication of some sort of weakening momentum in the ongoing strong upmove,” he said.
Mohammad is of the view that bulls will be in need of a fresh breakout with a strong close above 13600 levels to confirm that they are still in a commanding position. In that scenario, Nifty can initially extend its gains towards 13790 levels.
“Contrary to this a close below 13400 shall puncture the short term uptrend with initial trends about 13200 levels. For time being traders shall remain neutral and look to short only on a close below 13400 levels,” he added.
India VIX was up by 0.45 percent from 18.71 to 18.79. Overall lower levels of volatility suggest that Bulls are holding a tight grip and any small decline could be bought in the market.
On the options front, on the options front, maximum Put OI is placed at 13000 followed by 12000 strikes while the maximum Call OI is placed at 13000 followed by 13500 strikes.
“Marginal Call writing is seen at 13700 then 13800 strikes while Put writing is seen at 13200 then 13500 strikes. Options data suggests an immediate trading range in between 13200 to 13750 zones,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.
“On the weekly front, it continues its northward trend and has been forming higher highs from the last six weeks with a consecutive positive close. Now it has to continue to hold above 13350 zones to witness an up move towards 13750 zones while on the downside key support exists at 13300 zones,” he said.
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