The Nifty50 hit a fresh record high but profit booking in afternoon dragged the index to close flat with a negative bias on February 16. The selling in private banks, FMCG and IT stocks weighed on the sentiment.
The index formed small bullish candle which resembles Spinning Top kind of pattern on the daily charts. Spinning top is often regarded as a neutral pattern that suggests indecisiveness in the market. It can be formed in an uptrend as well as in a downtrend.
The broader markets closed moderately higher but advance decline ratio was negative as five shares declined for every four shares rising on the NSE.
For the time being, considering negative advance decline ratio and week candle formation of last two trading sessions, Mazhar Mohammad of Chartviewindia advised traders to avoid fresh long exposure to index whereas positional shorting can be considered on a close below 15,210.
India VIX was up by 1.40 percent from 21.47 to 21.71. The volatility index has to cool down below 20 levels for continuation in the ongoing momentum with higher market base, Chandan Taparia of Motilal Oswal feels.
The Nifty50 opened higher at 15,371.45 and hit a fresh intraday record high of 15,431.75, but wiped out all gains in afternoon to hit a day's low of 15,242.20. The index finally signed off with 1.20 points loss at 15,313.50.
"Nifty50 seems to have registered a Spinning Top kind of indecisive formation as it failed to sustain in the uncharted territories. Interestingly despite this new highs advance decline ratio remained negative for second day in a row hinting widespread profit booking in the broader markets," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
Hence, weakness in the index shall be expected if it trades below 15,242 levels and selling should be expected to get accentuated if it closes below 15,200 levels, with initial targets of 14,977 levels, according to him.
Nevertheless, as momentum is strongly biased towards bulls if they manage to hold on to 15,240 levels then the upward move can expand towards 15,500 levels, he feels.
On option front, maximum Put open interest was at 14,000 followed by 15,000 strike while maximum Call open interest was at 16,000 followed by 15,500 strike. Put writing was seen at 15,000 and 15,100 strikes while Call writing was seen 15,400 then 16,000 strike.
The abovementioned option data indicated that the Nifty could trade in an immediate range of 15,000 to 15,500 levels in coming sessions.
Bank Nifty opened gap up at 37,492.60 but descended throughout the day to hit a day's low of 36,762.75. The latter part of the day saw some consolidation and settled the day with losses of 207.85 points at 37,098.40. It formed a bearish candle on daily scale with a long lower shadow indicating declines were being bought.
"Bank Nifty continues its formation of higher highs - higher lows from the last three sessions. Now it has to hold above 37,000 to witness a move towards 37,700 then 38,000 while on the downside support is seen at 36,500 and 36,000," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On stocks front, bullish setup was seen in Jindal Steel & Power, ONGC, Power Grid, Tata Steel, Hindalco, Max Financial Services, Vedanta, Lupin, Havells, Apollo Hospitals, Tata Chemicals, SRF, Biocon and Reliance Industries while weakness was seen in Godrej Consumer Products, Zee Entertainment, Amara Raja Batteries, InterGlobe Aviation, Mindtree and TCS, he added.Disclaimer: "Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol."