Index trend and stocks in action November 06, 2019

The Nifty opened the session on a positive note, but soon gave up all the gains and traded with a negative bias throughout the day. At one point of time, the benchmark index was trading below 11,900 mark. However, in late afternoon, it witnessed a pullback from lower levels and reclaimed 11,900 mark but nothing could save it from closing in the red after seven trading sessions. The price action for the day formed a bear candle with a lower shadow, indicating recovery from the lows of the day.

Technically, it seems that the Nifty has managed to form a temporary top with it failing to cross the barrier, that is 12,000 mark, since the past couple of days. Further, the market breadth turned negative on Tuesday. We expect this current phase of consolidation and correction to continue. The index is likely to consolidate in the range of 11,820-11,980 before beginning to rise again. On the hourly timeframe, the Bollinger Bands have contracted, indicating a phase of low volatility. In the near term, the level of 11,820-11,840 is a crucial support zone. On the upside, the level of 11,980-12,000 is expected to act as a stiff resistance. However, once the index manages to take out the 12,000 mark, it is anticipated to head towards new highs.

Overall, the bias remains positive as long as the Nifty holds above 11,820 mark and traders should adopt buy on dips strategy. The index is likely to consolidate in the range of 11,820-11,980.  

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