The Nifty50 wiped out previous day's gains and ended lower on May 7 as a surge in coronavirus cases in India and the delay in a stimulus package worried traders.
Overall, the index was listless as it moved in a narrow range of 102 points and formed a small bearish candle, as the closing was lower than the opening.
It moved within the trading territory of the previous session, thus also formed an Inside Bar pattern on the daily chart, indicating indecisiveness among market participants.
Experts say consolidation is expected to continue in the 9,350– 9,100 range unless the index registers a breakout in either direction.
Traders are advised to wait for minor breakout before initiating trading bets.
The Nifty opened lower at 9,234.05 and remained volatile through the session.
The index hit an intraday high of 9,277.85 and a low of 9,175.90 before signing off the session at 9,199.05, down 71.85 points or 0.78 percent.
"If the index trades above 9,350 levels, then the upswing may initially get extended into the zone of 9,450–9,533 levels. Similarly, a breach of 9,100 shall resume the downswing, with initial targets of 8,900 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
The Nifty's 13-day EMA (placed at 9,261) is panning out interestingly as it is almost stagnant at around 9,270 levels for the four sessions.
"Therefore, on intraday basis if the Nifty manages to sustain above 9,270 levels, then that should be considered as an initial sign of strength," Mazhar Mohammad said.
India VIX fell by 3.20 percent to 39.93 levels. However, volatility index negated its lower high-lower low sequence of the last five weeks.
"Thus we may see further pressure on bounce with a roller-coaster ride in the market," said Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services.
On monthly options front, maximum Call open interest was at 10,000 then 9,500 strike while maximum Put open interest was at 9,000 then 8,000 strike. Except writing in 10,000 Call we haven’t witness any noticeable activity in other strikes.
The options data indicates an immediate trading range for the Nifty could be 9,000 to 9,500.
The Bank Nifty opened on a negative note and remained lacklustre through the day.
It was a perfect day for weekly option writers, as the banking index remained in a range of around 400 points, its narrowest range in last seven sessions.
As a result, the index formed a Doji candle and Inside Bar pattern on the daily chart, indicating indecisiveness among market participants. It closed at 19,491.80, down 202.75 points or 1.03 percent.
"Currently, it is sustaining well below a rising trendline breakdown on the daily chart, but if the Bank Nifty moves above 19,800, then only we may see a pull-back move towards the 22,200-22,500 zone," Chandan Taparia said.
"Going forward, immediate support is placed at 19,000 and then 18,700 levels, while resistance is now placed at 20,200 then 20,500 levels," he added.
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