Nifty trend for Friday and stocks in news: Persistent Systems, Thomas Cook, Wipro and HPCL

The roller-coaster ride continued on the eve of October F&O expiry. After opening the session with a gap-down, Nifty breached its October 15 mother bar’s low as well. It went on to test the support level as defined by the Principle of Polarity; resistance turned into support (11,578-11,610) and bounced back sharply to enter into the positive terrain for a brief period. Thereafter, it witnessed wild swings. Despite all these, the range of the day i.e. the difference between the high and the low was capped to 138 points, which is much below the 10-day average. HDFC duos were the main architect of the fall, as both lost over 1.5 per cent.

Nifty gained nearly 8 per cent in the October series and during this period, it recorded one of the best winning streaks of the year that lasted for 10 days. In the first 13 trading sessions, it rose by 1,170.60 points or 10.78 per cent. Thereafter, the level of 12,000-12,040 proved to be a sturdy wall of resistance as even after multiple attempts, the bulls were not able to cross this hurdle. And in the second half, it moved mostly in a range.

On Wednesday, Nifty slipped below its 20-DMA with a bearish engulfing formation. However, a bearish engulfing pattern requires confirmation but the candlestick formation did not give a conclusive one despite having closed lower than its prior bar. After having a lower high and a lower low, the candlestick has got a green body as its close is greater than the opening. On the lower timeframe i.e. 60-mins, the index has managed to close inside the channel after breaching its lower end.

Currently, Nifty is trading 1 per cent and 9 per cent above its 50-DMA and 200-DMA, respectively. India VIX is a key factor to monitor now (since a lot of uncertainty is in the air related to a new set of measures to curb COVID-19 cases in the European region as well as the US Presidential Election). It has increased to 24 from a low of nearly 17 at the beginning of October month. Sustaining above the mark of 24 would result in the breakout of the neckline of double bottom pattern and multi-weeks range.

Overall, the immediate support zone for the index is placed in the region of 11,540-11,610 as its confluence of the line of polarity and 50-DMA. A decisive breach of this support region would mean that we are heading lower towards the level of 11,407, which is a 50 per cent retracement level of the recent rally, followed by 11,262 levels.

On the upside, if bulls reclaim its 20-DMA, they would begin to regroup and might head towards the levels of 11,900 in the near term.