Mazhar Mohammad advises traders to remain neutral on the index. India VIX marginally rose by 0.44 percent to 14.18 levels.
On a volatile day of trading, the Nifty touched a record high in the morning then slipped but managed to close off the day's low on January 16 after the United States and China signed an initial trade deal.
The index stayed above the psychological 12,300-mark for the fourth session in a row and formed a Doji pattern on daily charts, which indicates indecisiveness among the bulls and the bears, as the index closed near opening levels and bounce was being sold in the absence of a follow-up buying interest.
The broader markets continued to see buoyancy despite volatility in the benchmark indices ahead of Union Budget to be presented on February 1.
Experts say the consolidation is expected to continue in the coming days and the index may gradually inch higher with near-term resistance at 12,500.
The Nifty opened flat at 12,347.10 and hit an intraday record high of 12,389.05 in early hour of trade only to immediately start correcting and hit the day's low of 12,315.80 in late morning deals followed by consolidation. The index closed 12.20 points higher at 12,355.50.
"The Nifty continued its lackadaisical way of movement as it remained in a narrow range for major part of the trading session before signing off the day with a Doji- kind of indecisive formation. A close observation of last three trading sessions revealed that this index is almost flat on closing basis around 12,350 levels, without adding any incremental gains," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
"It appears that Nifty is in need of a fresh breakout in either of the directions to add momentum. However, as our twin momentum oscillators generated a fresh sell signal, we expect a sideways move with negative bias for next couple of sessions."
On the downside, weakness shall get confirmed on a close below 12,278, which can provide a shorting opportunity, whereas a positive move beyond 12,389 may extent the rally to 12,450–12,490 but shall peter out sooner than later, he added. For the time, he advised traders to remain neutral on index.
The volatility index India VIX marginally rose by 0.44 percent to 14.18 levels.
On the options front, maximum Put open interest was seen at 12,000 followed by 12,200 strike, while maximum Call open interest was at 12,500 followed by 12,400 strike.
Marginal Call writing was seen at 12,500 and 12,400 strike; while some Put writing was seen at 12,300 and 12,350 strike.
The Bank Nifty moved within the trading territory of the previous session and thus formed an Inside Bar pattern on the daily chart. The index settled at 31,853.90, up 0.09 percent.
The banking index is making lower highs from the last four trading sessions and facing a hurdle around 32,000-mark. At the same time, it is respecting its bullish gap of 31,451-31,667."Now it has to continue to hold above 31,750 level to witness an upmove towards 32,350 then 32,500-32,600 zones, while on the downside support is now placed at 31,500," Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.