India VIX fell by 0.78 percent to 12.08. India VIX has fallen by 27 percent in the last three sessions and needs to hold below 13-12.50 zones to get the smooth ride.
The Nifty50 which started higher failed to hold gains and corrected throughout the trading day on Thursday and made a ‘Bearish Belt Hold’ kind of pattern for the second consecutive day in a row.
A ‘Bearish Belt Hold’ pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the trading day making up for the large body. The candle will either have a small or no upper shadow and small lower shadow.
Formation of Bearish Belt Hold for the second consecutive day in a row suggests a pause in the momentum as index faces stiff resistance around 10,500 levels. The index is trading well above its crucial short-term moving averages, which is a bullish sign.
Even though the index formed a bearish candle for the second consecutive day in a row, traders can still remain long with a stop below 10,400 on a closing basis. Bullish momentum will only continue when index surpasses 10,495 levels.
In Thursday’s price action, Nifty50 opened at 10,473 which was also its intraday high. The bears took control to post the opening tick and pushed the index below 10,450 levels. It closed 3.90 points lower at 10,440.30.
“The Nifty50 registered Bearish Belt Hold formation for the second day in a row as it signed off the day with an extreme rangebound move of 47 points. However, last two session price behaviour is suggesting that market is slowly slipping out of the clutches of bulls,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
Hence, to reclaim their strength back they need to immediately conquer the top of 10,494 levels else bears may tighten their grip over the markets in the near term.
Mohammad further added that traders are advised to remain cautious and maintain a tight stop below 10,400 on closing basis whereas fresh positions should be considered only on a close above 10,494 levels.
On the options front, maximum Put open interest was seen at 10,000 followed by 10,400 strikes while maximum Call OI was seen at 10,500 followed by 10,600 strikes.
Fresh Call writing stood at 10,400 and 10,450 strikes while marginal Put unwinding was seen during the day.
Option band signifies an immediate trading band in between 10,330 to 10,550 zones. The Nifty index remained flattish and was moving in the red and green territory for the most part of the session.
It opened positive but failed to hold its gains and closed the session with the marginal loss of 4 points by forming a Bearish Belt Hold candle for the second consecutive session.
Nifty has to continue to hold above 10,380 zone to witness an up move towards 10,495 then 10,550 while on the downside supports are seen at 10,330 levels to hold this positive momentum.
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