As long as Nifty sustains above 10,782 level one can retain bullish bias and look to buy the dips.
Nifty after initial dip immediately rebounded and extended gains as the day progressed to reclaim psychological 11,000 intraday on August 6, led by short-covering after a sharp fall in the previous session.
The index closed above 10,900 and formed strong bullish candle on daily charts after Hammer formation in the previous session, which indicated that bulls are back in action but if the index clears five-day moving average (10,981) decisively then there could be further strength in the market, experts feel.
India VIX fell 2.77 percent to 16.12, but higher volatility suggests a bear dominance and pessimism in the market.
Nifty registered a strong bullish candle with opening marubozu kind of formation in which intraday low and the opening price remains same suggesting buying pressure from the word go. This kind of formation as a follow through to last Monday's Hammer formation shall augur well for bulls hinting at a sustainable pullback attempt in the near term.
Interestingly lower time frame charts generated a buy signal after the last two sessions of brief recovery but Nifty is yet to clear its 5-day moving average and once that short term hurdle is also eliminated then bull case for near term pullback shall get strengthened further.
As long as Nifty sustains above 10,782 one can retain bullish bias and look to buy the dips, according to him.
He said in case pullback rally materialises then initial target shall be around 11,150 where 200-day simple moving average is placed. Contrary to this for any reason if 10,782 is breached then downswing shall get resumed with targets placed in the zone of 10,566–10,497, he added.
On the options front, maximum Put open interest is at 11,000 followed by 10,500 strike while maximum Call OI is at 11,000 followed by 11,500 strike.
Significant Call writing is at 11,200 followed by 11,400 strike while Put writing is at 10,700 strike. Option data suggests a trading range for Nifty could be around 10,700-11,200 zone.
Bank Nifty finally negated its formation of lower highs - lower lows after five consecutive trading sessions and formed a bullish engulfing candle on the daily scale. The index closed at 28,022.10, up 374.05 points.
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