The Nifty, after opening flat, remained volatile with a downward bias throughout the session and closed near the opening levels, forming a Doji pattern on the daily chart on September 16.
Geopolitical tensions spiked after Yemen's Houthi rebels launched drone strikes on two major Saudi oilfields that pushed up crude oil prices, a concern for countries like India which imports more than 85 percent of its fuel needs.
The formation of a Doji pattern after a bullish candle indicates there is some indecisiveness among the bulls as well as the bears.
After opening flat at 10,994.85, the Nifty continued to trade lower amid volatility and hit an intraday low of 10,968.20. The index closed 72.40 points lower at 11,003.50.
Global cues appear to have taken a toll on the Indian bourses as the Nifty50 remained under selling pressure from the word go and failed to witness a follow through buying to the robust upmove it registered on September 13, Mazhar Mohammad, Chief Strategist, Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
“However, at this juncture after today's price action bulls appear to be slightly on advantageous position as bears, despite negative news flows, failed to push the indices below 10,945 levels which appears to be critical near term support," he said.
If the Nifty manages to sustain above 10,945 in the next session, then it can attempt a breakout above 11,081 levels, he said. It will strengthen the position of bulls going forward and the confirmation will come once the Nifty closes above 11,141, which could facilitate a slightly bigger rally, Mohammad said.
Contrary to this, a close below 10,945 could weaken the index and initially drag it down to a 10,875–10,813 zone, he added.
As the index appeared to be stuck in a minor range of 11,084–10,945, traders should remain neutral till the Nifty breaks out above 11,141, Mohammad said.
On the options front, maximum put open interest is at 10,800, followed by 11,000 strike, while maximum call open interest is at 11,200, followed by 11,500 strike.
Call writing was seen at 11,200, followed by 11,100 strike while put unwinding was seen at all the immediate strikes.
Option data suggests that the Nifty could trade in a range of 10,800 to 11,200 levels in the coming sessions. India VIX moved up by 5.90 percent to 14.95 levels.
The Bank Nifty negated its formation of higher highs after five sessions and traded in the range of 250 points for most part of the day.
The index closed 0.87 percent lower at 27,855 and formed a bearish harami cross on the daily scale, as follow-up buying was missing at higher levels, while supports were intact at 27,750 zones.
"It has to hold above 27,750 levels to extend its move towards 28,100 then 28,350 levels, while on the downside supports exist at 27,750 then 27,500 levels," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.