The Nifty50 opened with a big gap on the upside but failed to hold onto momentum and closed below its opening levels making a small bull candle kind of pattern on the daily charts on Friday.

The index which started with a bullish note after rating agency Moody’s, upgraded Indian government bond rating to Baa2 from Baa3, while changing the outlook to stable from positive came as a big surprise to the market.

The bulls failed to hold on to the momentum and succumbed to selling pressure or profit booking towards the close of the session. Now a hold above 10,184-10,230 in the coming week will keep the hopes alive for the bulls as follow-up buying was missing in Friday’s session.

The Nifty50 opened at 10,324.55 and rose to an intraday high of 10,343. But, the index witnessed profit booking at higher levels as the index recorded an intraday low of 10,268 before closing the day at 10,283 up 68 points.

“Despite a strong up move, Nifty50 signed off the day with a small bull candle as it failed to build on to the gains after the gap up opening. It was looking more like a spontaneous reaction on the part of bulls cheering the positive news flows as intraday gains were capped at critical resistance point placed around 10338 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“Hence, it will be important to observe next trading session price action, as follow-up buying may confirm that trend has indeed reversed in favor of the bulls though the confirmation for the same shall come once Nifty50 manages to sustain above 10411,” he said.

Mohammad is of the view that on the downside it is important to look out for 10184 levels in Monday’s trading session as close below this point shall confirm bearish reversal once again.

India VIX moved up by 1.88 percent at 13.71. Volatility spiked even after decent gains of 0.67 percent in the index which shows that selling is being witnessed at higher levels.

On the options front, maximum Put OI was seen at 10200 and 10000 strikes while maximum Call OI was seen at 10500 followed by 10400 strikes.

Fresh Put writing was seen at 10300 strikes while Call writing is seen at 10400, 10500 and 10600 strikes. Option band signifies a trading band between the range of 10200 to 10400 for the next coming sessions.

“The Nifty index opened with a gap of more than 100 points and headed towards 10343. It completed 61.80% retracement of the entire down leg from 10490 to 10094 and witnessed a decline of around 50 points from higher levels,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Recently, it negated the formation of lower highs – lower lows and now needs to hold above 10230 zones to get the stability for next up move towards 10350 then 10400 zones while on the downside supports are seen at 10178 then 10120,” he said.

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