From the derivative front, call writers were seen adding hefty open interest at 10000 call strike which should act as a strong hurdle for the Nifty.
We can expect Nifty to consolidate for a while between 9600 and 10000. Unless Nifty closes below 9600, dips should be utilized to create long positions.
The zone of 9,500–9,000 could act as strong support for the markets from here. If this support is held in the coming sessions, then we are of the opinion that some stability is likely to return to the markets.
A level below 10150 could drag the Nifty towards 9,800 support, derived from 61.8% Fibonacci Fan of the swing seen from 6825 (Feb 2016 Bottom) to 12430 (Jan 2020 Top).
While bias is likely to remain bearish as far Nifty is holding below 12100 levels. Traders should keep a stock-specific action onto the radar.
Nifty is currently trapped in a range of 120 points which is bounded by the 21 and 50-day exponential moving averages, which indicates range-bound trading in Indian indices.
Nifty snapped its two-day winning streak on the back of weak global cues to close with a loss of 129 points at 12,119.
Negative technical indicator and bearish market breadth signal the probability of a further decline in Nifty.
Nifty made a rounding top pattern on the daily charts and retraced back towards 50 percent Fibonacci retracement levels of the swing seen from 11,930 to 12,430.
The theme of this month has been the mid and small-caps, which outperformed benchmarks with a huge margin.
The apt strategy to trade in such a market would be to play the range i.e. buy as close as possible to support and vice versa.
Nifty registered a new lifetime high of 12,389 during the week and has been trading with a gain of around 0.81 percent.
Benchmark index Nifty has witnessed sharp V-shape reversal rally since global tension started to fizzle out.
This week is an eventful one as participants are closely eyeing the earnings announcements, macroeconomic prints and pre-budget discussions.
Until Nifty sustains above 12,050-mark, there is a possibility of reaching higher levels like 12,300–12,450.
As long as Nifty trades below 12,150, the probability of retesting the lows of 11,800 remains high. Some relief for bulls can be expected on a close above 12,250.
The Nifty is likely to feel selling pressure at higher levels as far as it trades below 12,150-12,200.
Once Nifty surpasses the resistance zone of 12,300, it can march upwards to 12,500 as the level is near the rising trend line and upper band of Bollinger Band.
The prevailing consolidation to extend further and Nifty to hover within 12,100-12,400 zone.
"We had a good broad-based rally in the market where few marquee large-cap names joined hands with quality mid-cap counters. It’s a sign of a healthy bull run, which we believe is likely to continue."
Apart from December 2019, the last three F&O series were in deep green, which means even that winning streak has been broken.
At the current juncture, the divergences on secondary oscillators suggest further consolidation as the overall market is trading in the highly overbought zone on daily and weekly intervals.
"This week is a holiday-shortened one and we expect volatility to remain high due to scheduled derivatives expiry."
India VIX closed at 12.12 lower by 1.7 percent for the day. VIX has been in a downward trajectory for the last couple of months which has been supporting the market.
Nifty IT has given a fresh break out of its downward falling trendline on a daily interval which indicates a strong surge in prices.