Moneycontrol PRO

Technical View: Nifty forms Doji pattern yet again, directionless trade may continue

Mazhar Mohammad of advised traders to avoid short side bets as downside seems to be limited.

June 29, 2020 / 05:45 PM IST

The Nifty50 opened the week lower and remained volatile with a negative bias throughout the session on June 29. Weakness in Asian peers and extension of lockdown by another month by some states amid rising coronavirus cases worried traders.

The index closed rangebound, with a 0.7 percent loss and formed Doji kind pattern yet again on daily charts.

A Doji candle indicates some indecisiveness among the bulls and the bears, as the index closed near the opening level and bounces were being sold in the absence of follow-up buying interest.

Experts expect the directionless trade to continue for some time, at least till the index breaks in either side of the trading range of 10,194-10,553.

Traders should avoid short-side bets as downsides seemed to be limited, said Mazhar Mohammad, Chief Strategist– Technical Research & Trading Advisory at Intraday traders can consider going long above 10,337 for a modest target of 10,409 with a stop below intraday low.

The Nifty50 opened sharply lower at 10,311.95 and traded in a range of intraday high-low of 10,325.90-10,223.60 before signing off the session at 10,312.40, down 70.60 points or 0.68 percent.

"The near-term outlook continues to remain directionless with choppiness for the index, unless its registers a breakout on either side of its larger trading range present between 10,553 – 10,194 levels," Mohammad said.

He said downside looks to be limited even if the Nifty breaches 10,194 as roughly a new support point is emerging for every 70 point decline. "Therefore, a bigger correction may not possible unless the Nifty breaches psychological support of 10,000 levels," he said.

For the time, below 10,194 levels, instant support can be expected around 10,139 for the next session. Similarly on the upside, if the Nifty trades above 10,337 levels for at least 30 minutes, then the strength shall get extended up to 10,409 and if it closes beyond the level, then it may test 10,553 in a couple of trading sessions.

India VIX moved up marginally by 0.59 percent to 28.91 levels.

On options front, maximum Put open interest was at 9,000 followed by 10,000 strike, while maximum Call open interest was at 11,500 followed by 11,000 strike. Call writing was seen in 11,000 and 10,400 strike while Put writing was seen at 9,500 then 10,000 strike.

The options data indicates that the Nifty could trade in a wider trading range of 9,800-10,800, said Arpit Beriwal, Assistant Manager | Analyst-Technical at Motilal Oswal Financial Services.

The Bank Nifty opened on a negative note at 21,291.55 and drifted towards 21,000 level in the initial hour. However, it remained consolidative for the most part of the session and wiped out some of the losses as buying emerged at lower levels to close near 21,350 levels.

The index closed 233.05 points or 1.08 percent lower at 21,359 and formed a Hammer candle on the daily scale as dips were being bought into at lower zones.

"Now immediate support exists at 21,000 then 20,800 levels while on the upside hurdle is seen at 22,000 then 22,500 levels," Beriwal said.

Sunil Shankar Matkar
first published: Jun 29, 2020 05:05 pm