Nifty witnessed high volatility at the new all-time high at 16349 on Thursday and finally closed the day higher by 35 points amidst a zig-zag movement. After opening on a positive note, the market slipped into minor weakness in the early part of the session.
“Such formation of Doji patterns after the reasonable up move could be considered as confusion among participants at the crucial juncture. Sometimes, such movement results in reversal or downward correction from the highs. Having moved up sharply during an upside breakout, the odds of minor profit booking from the highs is likely,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Despite a positive close, overall the market was skewed in favour of bears for the second session in a row, hinting that broader market participants are only considering this rally as an opportunity to pare off their existing holdings.
Most sectoral indices also closed with losses. PSU banks were among the biggest drags, while realty and media stocks were also under selling pressure. FMCG, IT and metal stocks saw buying.
In the next session, it remains critical for the Nifty to sustain above 16,210 to retain positive bias as a breach of this can attract more selling pressure on an intraday basis with initial targets placed around 16147 levels. Contrary to this, some strength on the upside can be expected into the zone of 16,400-450 if bulls manage to push the index beyond 16,349,” said Mazhar Mohammad at Chartviewindia.in.
He advised traders to remain neutral on the index.
However, not every analyst believes that is a good strategy. Shrikant Chouhan, EVP – Equity Technical Research at Kotak Securities, said some profit booking at higher levels cannot be ruled out near 16,350-16,375 resistance levels. “Trade setup suggests that the ideal strategy would be to add long positions near crucial supports, he added.
India VIX, the fear gauge of the market, eased off 2.57 per cent to end at 12.87 levels.
