The Nifty50 remained volatile and traded in a narrow range before closing 0.7 percent higher on May 6. Banking and financials supported the market, whereas the selling in oil retailers, FMCG and bluechip IT stocks capped gains.
The volatility indicated that the market may be waiting for a stimulus package and looking at global developments.
The index snapped two-day fall and closed above 9,250 to form a small-bodied green candle, which resembled a Spinning Top pattern on daily charts, but failed to hold on to 9,300 levels.
A Spinning Top is 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 index strongly defended the 9,100-mark intraday. Hence, experts say 9,100 is expected to remain a crucial support in the near term. If that breaks, then there could be selling pressure.
Positional traders, who are still short on this market, should square off the short positions if the index sustains above 9,350 for more than 30 minutes in the coming session.
The Nifty opened higher at 9,226.80 but immediately slipped into the red to hit the day's low of 9,116.50. Volatile and rangebound trade followed and the index ended at 9,270.90, up 65.30 points or 0.71 percent.
"In the next trading session if it manages to defend 9,116 levels and sustains above the same, then the index shall remain sideways with a positive bias," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He said as the index remained in an extremely narrow range of around 100 points, for major part of the day it may face hurdle around 9,350 and positive momentum shall pick up on an intraday basis once it will go past the said hurdle.
In such a scenario, the index can initially expand its upswing towards 9,453, he added.
On the downside, it was critical that the Nifty sustains above 9,116 to prevent further damage. A breach can resume the downtrend, with initial targets of 8,900.
Ajit Mishra, VP-Research, Religare Broking, said it was just a breather and the bias would remain negative till the Nifty trades below 9,700.
"On the downside, we are eyeing the 8,900-9,000 zone to be tested shortly. Traders should focus more on position management as we are seeing erratic swings across the board," he said.
The Bank Nifty also witnessed Nifty-like tend and closed 422.70 points or 2.19 percent higher at 19,694.50. The index formed a bullish candle on daily charts.
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