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Technical View: Nifty forms bearish candle, can fall to 11,800 in coming sessions

The Nifty50 started off the day on a strong note and crossed the psychologically important 12,000-mark in the initial hour of trade but couldn’t sustain the momentum. The index closed with moderate gains as the stimulus package announced by Finance Minister Nirmala Sitharaman left the markets unimpressed.
The index failed to sustain the 12,000-mark and formed a small-bodied bearish candle on the daily charts as closing was lower than opening levels.
The index could consolidate after the recent run-up and if it breaks 11,790, then there could be further selling pressure, experts said.
For the time, traders should avoid directional bet on the index by shifting focus on stock-specific opportunities, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.
The Nifty50 opened strong at 11,973.55 to hit an intraday high of 12,022.05 but cooled off the finance minister’s announcement, slipping in to the red to the day’s low of 11,867.20. The index recouped some losses in the last amid volatility and closed 16.80 points higher at 11,931, continuing the uptrend for the eighth consecutive session.
“As the Nifty witnessed a mild sell-off from the critical psychological resistance point with an intraday high of 12,000 levels, our twin momentum oscillators generated a sell signal. Hence, in the next couple of trading sessions, we either expect sideways session or a dip towards 11,800 levels but slightly bigger correction can be expected if Nifty closes below 11,790 levels,” Mohammad said.
“As momentum is high, despite negative advance:decline ratio for fourth session in a row, if the Nifty manages a close above 12,000 levels in next session then index can head higher towards 12,200 levels whereas weakness on intraday basis can get accelerated if the Nifty trades below 11,867 levels with initial targets of 11,800,” he said.
India VIX was up by 3.67 percent from 20.38 to 21.12 levels.
Despite volatility, the option data indicated that the Nifty could see an immediate trading range of 11,700-12,100.
On the options front, maximum Put open interest was seen at 10,500 followed by 11,000 strike, while maximum Call open interest was at 12,500 followed by 12,000 strike. Marginal Call writing was seen in 12,200 and 12,500 strike while Put writing was seen at 11,600 then 11,900 strike.
The Bank Nifty opened positive at 23,955.60 and headed higher further to hit the day’s high of 24,190.35 in the first 15 minutes of the trade. However, it failed to hold its opening gains and declined around 600 points.
The index closed 134 points lower at 23,712.80 and formed a bearish candle on the daily scale, snapping its seven-day winning streak.
“The Bank Nifty has to continue to hold above 23,500 to witness an upmove towards 24,200 then 24,500 while on the downside key support exists at 23,200 then 23,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol. Read from source….