The Nifty50 which reclaimed its crucial resistance level of 11100 levels in intraday trade failed to hold on gains as traders preferred to book profits at higher levels. The index closed around the same levels where it opened making a ‘Doji’ kind of candle on the daily charts.
A ‘Doji’ is formed when the index opens and then closes approximately around the same level. However, it remains volatile throughout the trading day which is indicated by its long shadow on either side. The candle appears like a cross or a plus sign.
A Doji usually means indecisiveness among the bulls as well as bears. However, experts feel that as long as Nifty50 stays above 10,987 bulls have nothing to worry. Short term traders can look to book profits below 11,043, they say.
The Nifty50 which opened at 11070 rose to an intraday high of 11,118 but then witnessed selling pressure at higher levels which pushed the index below 11100. The index hit an intraday low of 11043 before closing the day at 11,069, up 6.95 points.
The Bank Nifty traded in a range from 27,350 to 27,600 zones as buying interest was seen at lower levels while selling pressure at higher zones. It formed a bearish candle with the long upper shadow which indicates that follow up is missing at higher zones.
The index has to continue to hold above 27150 zones to extend its move towards 27500 then 27750 zones while on the downside support exists at 27000-26850 zones, suggest experts.
“The Nifty50 registered a Doji kind of indecisive formation, despite cheers from monetary policy in the form of a rate cut, suggesting lack of conviction among bulls at higher levels. In next trading session Nifty may come under intense profit booking if it trades below 11043 kind of levels atleast for 30 minutes,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Nevertheless, the near-term positive outlook will not get adversely impacted unless the said index closes below 10987 levels thereby confirming the failure of Wednesday’s breakout,” he said.
Mohammad advises short-term traders are advised to book profits below 11043 kinds of levels whereas positional traders with multi-week time horizon can remain cautiously optimistic and look for a bigger target placed around 11350 with a stop below 10987 on a closing basis.
India VIX fell down by 1.25 percent at 15.43 levels. VIX needs to hold below 16 zones to extend its positive momentum with the hold above 10985 zones.
On the options front, maximum Put OI is placed at 11,000 followed by 10,700 and 10,500 strikes while maximum Call OI is placed at 11000 followed by 11300 strikes.
Put writing is seen at 11,000 and 11,100 strikes while Call writing is seen at 11,400 and 11,100 strikes. The Options band signifies a trading range in between 10,900 to 11,200 zones.
“The Nifty index continues its positive momentum towards 11118 marks but it failed to hold its gains and closed near its opening level. It formed a Doji Candle on the daily scale but making higher lows from seven trading sessions,” Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.
“The index has to continue to hold above 10985 zones to extend its move towards 11176 zones while on the downside support exists at 10929 then 10880 zones,” he said.
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