Technical View: Nifty forms Doji pattern; traders should remain stock-specific amid directionless trade

The Nifty50 remained lower for the majority of the session amid volatility and snapped four-day winning streak on October 22, following weakness in global peers.

The index closed below 11,900 levels and formed Doji pattern on the daily charts as closing was near opening levels. A Doji candle indicates there is some indecisiveness among the bulls and the bears, and bounces were being sold in the absence of follow-up buying interest.

Experts expect the lacklustre trade to continue in coming days given that the Nifty is moving in a range of 11,800-12,000 levels.

Given there seems to be no trading opportunity in either of the directions, Mazhar Mohammad of Chartviewindia.in advised traders to remain stock-specific by avoiding index bets till Nifty emerges out of the said trading range.

The Nifty50 opened down at 11,890 and traded lower for major part of the session to hit an intraday low of 11,823.45 amid volatility. The index closed 41.20 points lower at 11,896.50.

"Nifty50 registered a Doji kind of indecisive formation for a second day in a row pointing towards weakening momentum. However, on the downside support may be emerging around 11,800 levels as bulls, for time being, appear to be chalking out a new trading range in the zone of 12,000 – 11,800 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

Hence, he feels unless Nifty emerges out of the said trading range, a directional movement may not emerge.

In case 11,800 is breached on a closing basis, the correction shall get accelerated towards recent corrective swing low of 11,661 levels, whereas, a close above 12,000 shall pave the way for 12,200 levels, he said.

India VIX moved down by 1.24 percent from 22.91 to 22.63 levels.

"The index negated its higher highs of the last three sessions but it needs to further cool down below 20 zone for market stability and keeping in account volatility could spike ahead of US election," Chandan Taparia of Motilal Oswal said.

On option front, maximum Call open interest was at 12,500 followed by 12,000 strike, while the maximum Put open interest was at 10,500 followed by 11,500 strike. Call writing was seen at 12,500 then 12,000 strike while Put writing was seen at 11,800 then 11,500 strike.

Option data indicated an immediate trading range for the Nifty at 11,700 to 12,100 levels for coming days.

Bank Nifty opened lower at 24,447.35 and remained consolidative with zigzag trade during the day. Most of the Banking stocks were trading flat as the index settled the day with losses of 150.80 points at 24,484.20.

It closed negative but has been making higher lows since the last five trading sessions and holding well above key support of 24,000 mark.

It formed an Inside Bar as it traded inside the trading range of last sessions, but good part is that declines are being bought, said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

The index has to hold above 24,250 to witness an upmove towards 24,750 then 25,000, while on the downside support is seen at 24,000 then 23,750 levels, he added.

Positive setup was seen in in Ashok Leyland, Bharti Airtel, L&T Finance Holdings, MRF, Amara Raja Batteries, Tata Motors, Axis Bank, Bajaj Finance, Tata Steel, Havells and JSW Steel, while weakness was seen in Hero MotoCorp, IndusInd Bank, Indiabulls Housing Finance, Infosys, Cipla and Titan, Chandan Taparia said.