India VIX moved up by 6.70 percent at 13.68 levels. VIX has gone to its highest levels in last 12 sessions amid political concern.
The Nifty50 after strong opening traded higher in the morning, but wiped out all those gains in later part of the session to close below psychological 11,000-mark on Wednesday.
The index forms a bearish candle on the daily charts which also resembles a ‘Dark Cloud Cover’ kind of pattern on the daily charts.
A Dark Cloud Cover pattern is a bearish pattern which consists of two candles. It is formed when a large red candle, the one we saw in Wednesday’s trading session partially covers the preceding bullish candle which was formed on Tuesday.
Also, the bearish candle has to close below the midpoint of the previous bullish candle.
The 30-share BSE hit a fresh record high of 36,747.87 before closing 146.52 points lower at 36,373.44 while the Nifty Midcap index lost a percent.
The Nifty50 after opening at 11,060.20 moved close to last week’s high to hit an intraday high of 11,076.20, but selling pressure in afternoon dragged it below the psychological 11,000-mark to hit day’s low of 10,956.30.
The index closed 27.50 points lower at 10,980.50, but managed to hold its 5-DEMA of 10,972.
“Bulls appear to be in a dilemma as the market is not witnessing follow through buying post breakout as another attempt to get past 11,078 failed in Wednesday’s session which resulted in a bearish candle formation with a potential Double Top kind of formation,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“If we read last 5 days of price action it appears that Nifty50 is carving out a fresh trading range between 11,078–10,925 levels,” he said.
He further said hence in next trading session it becomes critical for Nifty50 to sustain above 10,925 levels. “Failure to do so shall trigger fresh bout of selling with targets close to 10,760 kind of levels.
For time being it looks upsides can remain capped around 11,078 levels, Mohammad said. “Hence, traders are advised to adopt a neutral stance for the day as Nifty50 may remain choppy and directionless in next session.”
India VIX moved up by 6.70 percent at 13.68 levels. VIX has gone to its highest levels in last 12 sessions amid political concern.
On the option front, maximum Put open interest (OI) was seen at 10,800 followed by 10,600 strike while maximum Call OI was at 11,100 followed by 11,000 strike. Meaningful Call Writing was seen at 11,100 strike whereas Put Unwinding was seen at all the immediate strikes.
Option band signifies an immediate trading range in between 10,880 to 11,080 zones, experts said.
“Nifty index opened positive but failed to surpass immediate hurdle of 11,080 and corrected sharply towards 10,950 zones. Index has recently given a breakout above 10,929 zones but absence of follow up buying is missing at higher levels as only selective heavyweights are holding the gains in the market,” Chandan Taparia, Associate Vice President | Analyst-Derivatives, Motilal Oswal Securities told Moneycontrol.
Hence, he said the index has formed a Dark Cloud Cover pattern as bears are pushing it from higher zones. “Now if it manages to hold above 10,950 zones then only positive to rangebound move could be seen towards 11,080 zones while a hold below 10,929 could confirm a short term Double Top pattern for a potential decline towards 10,888 then 10,835 zones.”
Bank Nifty failed to continue its strength and drifted towards 26,850 zones. It is finding hurdle near to 27,165 zones while immediate supports are seen near to 26,750 levels, Taparia said.
It has to hold above 26,750 zones to witness an up move towards 27,000 then 27,165 while on decline major support is seen at 26,650 levels, he added.
