Positional traders can continue with their short positions for a target of 11,740, intraday traders can consider fresh shorting if the index trades below 11,888 for at least 30 minutes in the next session, says Mazhar Mohammad.
The Nifty snapped a two-day losing streak and closed moderately higher in a volatile session of trade on December 9, supported by select banking and financial stocks and Reliance Industries.
The index managed to defend 11,900 levels and formed a Doji pattern on daily charts, as the closing value was near to the opening tick.
The pattern indicates indecisiveness among the bulls as well as the bears, hence experts say there could be more consolidation in the coming days before directional move on either side. But a negative advance:decline ratio -- three shares declined for every two shares rising--point to selling pressure.
After opening higher at 11,939.10, the Nifty immediately drifted lower and hit an intraday low of 11,888.05. It, however, recouped losses in the late morning deals to hit the day's high of 11,981.95. The index closed 16 points higher at 11,937.50.
"Albeit Nifty50 made a pullback attempt, it proved to be a tepid one as the index faced selling pressure from intraday high of 11,981, after almost testing its 13-day exponential moving average (11,989), which resulted in a Doji kind of formation. Moreover, this pull-back attempt is on the back of negative advance:decline ratio, suggesting continuation of selling pressure in the broader markets," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
In the next session, if the Nifty50 declines below 11,888, then it can slide towards its 50-day simple moving average (11,740), he said.
Stability can be expected on a close above 12,000, Mohammad said. Positional traders, he said, could continue with their short positions for a target of 11,740, whereas intraday traders could consider fresh shorting of the index if it trades below 11,888 for at least 30 minutes in the next session and look for a target 11,800, with a stop above intraday high.
On the monthly options front, maximum Put open interest was seen at 12,000 followed by 11,500 strike, while maximum Call open interest was seen at 12,000 followed by 12,200 strike.
Marginal Call writing was seen at 12,000 strike, while Put writing was seen at 11,900 followed by 11,800 strike.
Above mentioned Options data suggests there has been a shift in a lower trading range in between 11,700 to 12,100 for the Nifty.
India VIX moved up by 7.02 percent to 14.59 levels.
In line with the broader market, the Bank Nifty, too, remained volatile throughout the session and formed a Doji candle on the daily chart. The banking index failed to sustain above the breakdown level of a double-top pattern on intraday scale and concluded the session with negligible loss. It closed at 31,316.70, down 24.80 points."Till the time Bank Nifty sustains below its immediate hurdle of 31,500–31,600 levels, we may see a corrective move towards its next support of 31,000 and 30,800 levels," Chandan Taparia, Vice President | Analyst-Derivatives at 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.