Technical View: Nifty forms small-bodied candle; 11,890 level crucial for bulls

The Nifty closed above 11,900 levels on November 4 but formed a small-bodied candle that resembles a ‘Shooting Star’ formation. The index closed in the green for the seventh consecutive day.

For the bulls to remain in control, the index has to hold above 11,880 levels on a closing basis, say experts. The index is likely to trade in a range, as it is trading near crucial resistance levels but there is plenty of action that will be centred around stock-specific opportunities.

The final tally on D-Street: the Sensex up 136 points to close at a new high of 40,301, while the Nifty closed with gains of 50 points to 11,941.

The Nifty, which opened at 11,928, rose to an intraday high of 11,989. It fell to an intraday low of 11,905 before closing the day at 11,941.

“The bulls appear to be dragging their feet on the upside, as the market remained listless for major part of the trading session, after witnessing a buoyant opening, which resulted in the slightly longer upper shadow and resembles a Shooting Star formation,” Mazhar Mohammad, Chief Strategist, Technical Research, Trading Advisory, Chartviewindia.in, told Moneycontrol.

“In the next trading session, if bears manage to pull down the indices below 11,905 levels for at least 30 minutes then it can induce more selling pressure on an intraday basis, whereas short term weakness can get confirmed on a close below 11,890 levels,” he said.

Mohammad advised traders to remain neutral on the index and to shift focus on stock-specific opportunities.

The Bank Nifty continued its positive momentum for the seventh consecutive session and headed towards 30,600 zones. However, it failed to hold on to its gains and closed flat near 30,300 zones.

Supports are gradually shifting higher and now the index has to hold above 30,000 zones to head towards major swing high of 30,800 zones, while on the downside, support is seen at 29750 levels, say experts.

On the monthly options front, maximum Put OI is at 11,600 followed by 11,500 strikes, while maximum Call OI is at 12,000 followed by 11,800 strike.

Put writing was seen at 11,600 and 11,700 strikes, while Call writing was seen at 12,100 followed by 12,000 strikes. Options data suggests a broader trading range in between 11,600 to 12,100 zones.

“The Nifty50 failed to surpass psychological 12,000- marks and witnessed some consolidation with a bullish bias. It has been forming higher highs–higher lows on the weekly scale and supports are gradually shifting higher,” Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services Ltd, said.

“Now, it has to continue to hold above 11,880 levels to witness an up move towards 12,000 then 12,103 zones while on the downside, major support is seen at 11,780 zones,” he said.