Technical View: Nifty at record close but forms small bearish candle; 11,435 crucial for bulls
The Nifty50 after opening sharply higher hit a fresh intraday record high in the morning and remained rangebound throughout the session on Thursday, but the index formed small bearish candle on the daily charts as closing value is lower than opening value.
Not only frontline indices but also broader markets ended higher. The Nifty Midcap index was up half a percent while the BSE Sensex closed above psychological 38,000-mark for the first time, up 136.81 points at 38,024.37.
The market has been consolidating from the beginning of week but the gradual upside continued which took the market to new record high levels, experts said, adding as the market is slowly moving into overbought position, traders are advised to trade with caution.
The Nifty50 after opening at 11,493.25 touched a fresh all-time high of 11,495.20 and traded in about 40-point range for rest of the session. The index ended at fresh record closing high of 11,470.70, up 20.70 points, and is 29 points away from 11,500 levels.
“Nifty50 moved in an extremely narrow range of 40 points before signing off the session with a small bearish candle on intraday basis but remained positive when compared to Wednesday’s closing price,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said these kind of narrow ranges for almost last 4 trading sessions are suggesting that the index is positioning itself for a big spurt in either of the directions. “However slew of technical parameters are pointing towards caution with negative divergence beside being in overbought levels warranting a short term correction.
But if the indices chose to defy these parameters and move ahead then the current upswing shall get extended initially up to 11,560 kind of levels, he feels. “On the downsides critical short term support is placed around 11,359 breach of which on closing basis shall confirm weakness.”
Jayant Manglik, President, Religare Broking said, “We’re in uptrend and traders should align their positions accordingly. However, maintain extra caution in stock selection now as we’ve already seen decent surge.”
India VIX moved up by 1.33 percent at 12.70. Overall lower volatility suggests that bulls are likely to hold the market, experts said.
On option front, maximum Put open interest (OI) was seen at 11,000 followed by 11,300 strike while maximum Call OI was at 11,500 followed by 11,600 strike. Put writing was seen at 11,400 followed by 11,500 strike whereas marginal Call writing was seen at 11,700 followed by 11,600 strike.
“It has been making higher top – higher bottom formation and every small decline is being bought in the market as supports are gradually shifting higher,” Chandan Taparia, Associate Vice President | Analyst-Derivatives, Motilal Oswal Securities told Moneycontrol.
He said now the index has to continue to hold above 11435 zones to extend its move towards 11,500 then 11,600 zones while on the downside support is seen at 11,350 then 11,300 zones.