Last Updated : May 14, 2018 04:42 PM IST | Source:

Technical View: Nifty forms ‘Doji’ on daily charts ahead of Karnataka poll outcome

The index which breached 10,800 levels on an intraday basis but managed to climb back and closed above 10,800 for the second consecutive day in a row.

Kshitij Anand @kshanand

Kshitij Anand

The Nifty50 which started on a mildly positive note failed to gain momentum and closed flat on Monday forming an indecisive pattern known as ‘Doji’ on the daily candlestick charts.

A 'Doji' is formed when the index opens and then closes approximately around the same level but remain volatile throughout the day which is indicated by its long shadow on either side. It appears like a cross or a plus sign.

The index which breached 10,800 levels on an intraday basis but managed to climb back and closed above 10,800 for the second consecutive day in a row.

On the technical charts, Nifty bounced back near its 5-DEMA placed at 10,764. Tuesday could turn out to be a deciding day for the Indian market. We could see a breakout above 10850-10,900 while a break below 10,680 could turn conditions in favour of bears.

“The Nifty50 registered a Doji kind of indecisive formation ahead of the major event suggesting that market participants lacked directional clue and has taken a cautious stance. Although the technical picture is looking somewhat positive, but the market is bound to get influenced by the event,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“Traders are advised to be prepared for wild swings in either of the directions over the course of the next session and advised focus on larger trends rather than getting worried by the volatility of the day,” he said.

Mohammad further added that in case if Nifty50 registers a short-term top at Monday’s high of 10,834 then the correction may get eventually extended up to the zone of 10,534 – 10,456 over the next couple of sessions.

“In between, 10,601 can act as a minor support but corrective swing shall get culminated only after dipping below 10,601. On the other hand, a positive outcome may drive the indices initially towards its logical targets of 10,928 levels,” he said.

India VIX moved up by 1.93 percent at 14.25 levels. On the options front, maximum Put OI is placed at 10,500 followed by 10,700 strikes while maximum Call OI is placed at 11,000 followed by 10,800 strikes.

Fresh Put writing is placed at 10,700 followed by 10,800 which is shifting its support to higher zones while Call writing is seen at 11,100 and then towards 10,900 strikes.

“Option data suggests an immediate trading range between 10,700 to 10,900 zones. The Nifty index remained in a range of 40-50 points for the entire trading session and closed on a flattish note ahead of Karnataka Election result,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It formed a Spinning Top Candle on a daily scale which suggests the absence of follow up buying at crucial zones,” he said.
First Published on May 14, 2018 04:41 pm
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