The Nifty50 rose sharply higher after the Reserve Bank of India announced Rs 50,000 crore special liquidity facility for mutual funds and ended strong though it witnessed some selling pressure at higher levels on April 27. Positive global cues also supported the market.
The index though failed to hold on to the crucial 9,300 level due to selling pressure and formed a Gravestone Doji kind pattern on the daily charts.
The inability of the bulls to capitalise on strong opening gains is hint that the market is stuck in the 9,400–8,900 consolidation range.
Experts expect the consolidation to continue and the range to break only if the index closes decisively above 9,400 consistently in the coming sessions.
A Gravestone Doji is formed when open, low and the closing price are all at a similar level. The candle has a long upper shadow that depicts a fall from the intraday high and no lower shadow.
Traders are advised to remain neutral on the long side till the Nifty registers a breakout above 9,400 on closing basis.
The Nifty50 opened strong at 9,259.70 and extended gains to hit an intraday high of 9,377.10 but some selling pressure at higher levels pulled the index from day's high to day's low of 9,250.35 in late trade. It closed at 9,282.30, up 127.90 points, or 1.40 percent.
"In next trading session if the index slips below 9,250 levels, then it can slide into the nearest support placed in the zone of 9,141 – 9,079 levels. However, a strong close below 13-day EMA (9,079) can set the tone for corrective downswing with initial targets of 8,900 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
Upward strength can be expected to resume on a close above 9,400, with eventual targets placed around 9,950, he said.
Mohammad advised intraday traders to short in the next session if the Nifty trades below 9,250 and look for a target of 9,100 with a stoploss above intraday's high.
India VIX fell by 2.76 percent to 38.04 levels, while the options data indicates an immediate trading range for the Nifty at 9,000-9,500.
On monthly options front, maximum Call open interest was at 9,500 then 10,000 strike while maximum Put open interest was at 9,000 then 8,000 strike. Call writing was seen at 9,500 then 9,600 strike while meaningful Put writing was seen at 9,200 then 9,300 strike.
The Bank Nifty opened positive and gradually extended its gains towards 20,200 as buying was seen in selective private banks. It formed a small bullish candle on the daily scale and relatively outperformed the benchmark index.
It managed to close above psychological important 20,000- mark, up 2.52 percent, or 494.55 points, at 20,081.20 and supports are gradually shifting higher.
"The index is trading in between 18,700 to 21,100 levels from last 11 trading sessions and it may move in the same for coming days too. Going forward, immediate support is placed at 19,500 then 19,100 levels while resistance is placed at 20,500 and 21,100 zone," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.