NEW DELHI: Nifty50 tested its crucial support at 11,250 level on Wednesday and even breached the psychological mark of 11,200 before staging a recovery. The index closed above the said support and ended up forming a small bullish candle on the daily chart.
Analysts said while the bias remains negative, Thursday’s being the weekly expiry day, Nifty may see a short-covering bounce. Support for the index stays in the 11,250-11,155 range, they said, adding that any upside for Nifty50 from here on would be contingent upon a sustained move above the 11,300 level.
“Some sort of stability could emerge in the next session, as suggested by positions ahead of the weekly expiry, which can pave the way for short covering next session. Sustaining above the 11,300 level can push Nifty towards the 11,350 – 11,380 zone ,” said Mazhar Mohammad of Chartviewindia.in.
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Mohammad said it looks prudent on the part of short-term traders to remain on the sidelines. Intraday traders can consider shorting below the 11,250 level for a modest target of 11,190, he said.
For the day, Nifty rose 39.35 points, or 0.35 per cent, to end at 11,278.
“Nifty50 and Nifty Bank have reached the extreme oversold territory on the shorter timeframe chart, with a positive divergence, suggesting that a relief rally is in the offing in the coming sessions,” said Aditya Agarwala of YES Securities. He said any failure to sustain beyond the 11,330-11,340 zone may lead to fresh selling pressure, dragging the index lower towards its 50-DMA at 11,154.
Rajesh Palviya of Axis Securities said while the index has formed a small bullish candle on the daily scale, it formed a lower high-low pattern, which is a negative sign. “During the day, Nifty had buying support near its 50 day SMA at 11,155. For any upside, the 11,300 level will be a crucial hurdle to watch out for. Any sustainable move above this will add strength to the 11,350-11,400 zone. On the downside, the immediate support remains in the 11,200 level,” said
Independent analyst Mahish Shah said Nifty has been forming narrow candles with small real bodies. “The price action does suggest we are in a corrective decline, but the selling taking place is novice action. Support for the index is placed in the 11,200-11,175 zone, below which Nifty will trade lower in the 11,000-10,900 zone,” he said.