Nifty50 twice attempted to climb above the previous closing of 15,108, but failed to hold the same and remained volatile through the day with a negative bias on May 19. The index fell half a percent and formed small bearish candle which resembles a Shooting Star kind of pattern on the daily charts.
Banking & financials and metals, which rallied the most in previous sessions, witnessed profit booking. Experts feel 15,137 will remain crucial to see a record high level again.
A Shooting Star pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. This pattern is usually formed in an uptrend and is treated as a reversal pattern but it would require confirmation.
Mazhar Mohammad of Chartviewindia advised traders to remain neutral on long side unless Nifty gets past 15,137 whereas intraday traders can consider shorting below 15,000 and look for a modest target of 14,940.
The Nifty50 opened lower at 15,058.60 and recovered to hit an intraday high of 15,133.40, but failed to hold the same and traded lower for rest of the session amid volatility and hit a day's low of 15,008.85. The index managed to hold 15,000 mark, though closing lower by 77.90 points at 15,030.20.
"Bulls disappointed as Nifty50 failed to witness follow through buying to the preceding session’s breakout as it signed off the session with a Shooting Star kind of formation with a relatively larger upper shadow," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
"Though, at this point in time, last Tuesday's breakout is still intact it can be whipsawed if the index closes below 14,938 in next trading session. Hence, it looks critical for bulls to instantly register a close above 15,137 levels to tighten their grip on the markets," he said.
If the index closes above 15,137 levels, then hopes of retesting life time highs placed around 15,431 remains much higher, according to him.
Contrary to this, a close below 14,938 in next two trading sessions can reinstate the sideways trend with a possible range of 15,150 to 14,600 levels, he said.
India VIX moved up marginally by 0.40 percent from 19.24 to 19.31 levels, but still remained below crucial 20 mark.
Option data indicated that the Nifty could see wider trading range of 14,700 to 15,300 levels for coming sessions.
On option front, maximum Put open interest was seen at 14,000 followed by 14,500 strike while maximum Call open interest was seen at 15,000 followed by 15,500 strike. Call writing was seen at 15,100 and 15,300 strike while Put writing was seen at 14,900 then 15,000 strike.
Bank Nifty opened negative at 33,717.10 and traded southwards for most part of the day. Profit booking-led decline was seen in banking stocks and weakness took the index to 33,600 levels. The index fell 237.20 points to close at 33,685.20 and formed a Doji sort of candle on daily scale as it closed near to its opening levels.
"Bank Nifty has to hold above 33,500 to witness an upmove towards 34,000 and 34,250 while on the downside support is seen at 33,333 and 33,000 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On stocks front, bullish setup was seen in BHEL, HPCL, United Breweries, Sun Pharma, Lupin, Apollo Hospitals, Bata India, Pidilite Industries, Aurobindo Pharma, Jubilant Foodworks, IOC and Ashok Leyland while weakness was seen in PNB, HDFC, JSW Steel, Bharti Airtel, Kotak Mahindra Bank, M&M Financial, ITC and L&T, he added.