After forming a series of higher highs and higher lows over the last 2 months, Nifty seems to have formed minor degrees of lower highs and lower lows in the last 4-5 sessions amidst range movement. This pattern could be reflecting ongoing consolidation in the market. However, a sustainable move above 19,870 levels is expected to negate this bearish pattern, Nagaraj Shetti of HDFC Securities.Nifty Futures Open Interest (OI) indicated a build-up of fresh long positions. FIIs have, however, been liquidating their long positions since 21st July after Nifty made an all-time high of 19,992 on 20th July. The RSI is currently in a bearish crossover, suggesting a potential downside.
Put Writer additions were observed in 19,600 and 19,700 strikes, indicating that the downside support is getting stronger, analysts said.
What should traders do? Here’s what analysts said:
Rahul Ghose, Founder & CEO, Hedged
Today’s sharp-up move saw call writers run for cover. There was significant short covering in the sold calls and put writing also emerged for this week’s expiry and the monthly expiry. Nifty has a strong base between 19,400 and 19,550 with upside targets open. Bank Nifty on the other hand has to cross above the 46,300 level to start an up move again. The max pain level of Bank Nifty has not yet shifted from the 45700 level and any rallies up to this level are likely to get sold into.
Osho Krishan, Sr. Analyst, Technical & Derivative Research, Angel One
As far as levels are concerned, 19600 is likely to act as a cushion, while the pivotal zone of 19500, coinciding with 20 DEMA, is expected to act as sacrosanct support. On the higher end, a cluster of resistances can be seen around 19,800 – 20,000 in the comparable period.
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas
On the daily charts, we can observe that the Nifty has bounced from the 20-day moving average of 19,600. The bounce-back has overlapped in nature and hence we believe that there is more room for consolidation. A study of the hourly Bollinger bands suggests contraction of range and further points towards range-bound price action. The daily and hourly momentum indicators provide divergent signals which also suggest the absence of trending moves. Considering all the above parameters, we shall continue to maintain that nifty is likely to remain range bound between 19,500 – 20,000. Crucial support levels to keep handy are 19,630 – 19,600 and on the upside, 19,800 – 19,860 is the immediate hurdle zone.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)