The index has been making lower top-lower bottom formation on daily scale for last five sessions. Nifty on Tuesday closed 1.10 points, or 0.01 per cent, down at 9,871.50.
During the process, a small-bodied candle with a long lower shadow emerged on the daily charts.
“Short coverings helped Nifty to recovers from day’s low. If we look at candles, one with a long lower shadow has emerged. It has a potential to halt the current downtrend and we can expect the markets to attempt and find some base,” said Milan Vaishnav, CMT, MSTA, Technical Analyst, Gemstone Equity Research and Advisory said.
“Also, this candle remains important as it has emerged when the Stochastic indicator is oversold and the support of 100-DMA remain in close vicinity,” Vaishnav added. However, this requires confirmation on the following day.
On the option front, maximum Put open interest (OI) was at 9,800 followed by 9,700 strike while maximum Call OI stood at 10,000 followed by 10,200 strike.
“We have seen significant Call writing at 9,850 and 9,900 strikes, while fresh Put writing was seen at 9,850 and 9,800 strikes. Option band signifies trading range in between 9,820 to 9,950 zones,” said Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Financial Services.
The fear gauge, volatility index or India VIX index on NSE closed 1.53 per cent down at 13.1350.
On the further movement of Nifty, Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking in a chat with ET Now said, “We expect this kind of consolidation to continue for the next couple of days at least wherein 9,950-10,000 would act as a very strong resistance. Any bounce back towards those levels is likely to get sold into and we would expect index to slide below 9,800 and even 9,680 quite soon. As far as short-term trend is concerned and we expect some kind of selling pressure to continue at higher levels wherein 9,950-10,000 remains to be a wall now.”