Technical View: Nifty snaps 2-day losing streak to form bullish candle; 10,999 crucial for upside

Benchmark indices opened in the negative on July 31 with Nifty50 below 11,050, but bulls made their presence felt in afternoon trading and helped Nifty50 snap its two-day losing streak to close above 11,100. Auto, FMCG, IT, metals and select banks stocks gained momentum.

The index held the psychological barrier of 11,000 and formed a bullish candle on daily charts. India VIX fell by 0.15 percent to 13.59 level.

Recovery in the second half gives hope that the positive momentum will continue in the coming sessions, but Nifty50 needs to hold 11,100 level, experts feel.

Nifty50 opened lower at 11,034.05 and fell below 11,000 to hit an intraday low of 10,999.40, but managed to recoup losses in afternoon and hit day's high of 11,145.30. The index closed 32.60 points higher at 11,118.

"Nifty50 is attempting to pull back as it registered a bullish candle before signing off the session. The key positive take away from today's price action is the fact that after a gap down opening at 11,034 levels the said index not only managed to fill that intraday gap but also registered a strong positive close. This kind of price behaviour should instil some confidence among bulls and if it sustains above 10,999 in next session, some positive price action can be witnessed," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He further advised traders to refrain from creating long positions until these levels consolidate as Nifty is still trading below its 200-day moving average.

As the trend is still favouring bears, if this index trades below its psychological support of 11,000 level for at least 30 minutes then it can come under further selling pressure which shall provide intraday trading opportunity on the short side for modest gains of around 50-100 points, he added.

Bank Nifty drifted towards 29,550 but bounced back sharply towards 29,000. The index gained 84.40 points to close at 28,876 and formed a bullish candle on daily scale as it closed above its opening levels but forming lower lows from past two trading sessions.

"The index has broken its rising trend line which was formed by connecting swings lows of 25,599, 26,617, 26,719 and 28,871 levels and now till it holds below 29,000 zone weakness could be seen towards 28,550 then 28,388 zones, while on the upside hurdles are seen at 29,250 then 29,500 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On the Options front, maximum Put open interest (OI) is at 11,000 followed by 11,200 strike while maximum Call OI is at 11,500 followed by 11,300 strike.

We have seen Put writing at 11,000 followed by 11,100 strike while Call writing is at 11,100 followed by 11,500 strike.

The Option data suggests a trading range between 10,800 and 11,300 zones.