Technical View: Up, up and away! Nifty on track to hit bigger target of 11,400

February 06
17:29 2019

Breakout, finally! Five days of a successive rally in the Indian markets pushed Nifty50 beyond its crucial resistance levels of 10,985-11,000 on Wednesday. The index made a long bullish candle for the 5th consecutive day in a row.

Nifty50 opened at 10,965 slipped marginally to 10,962 before breaking above 11,000 levels. It touched an intraday high of 11,072 before closing the day at 11,062, up 128 points from its previous close of 10,934.35.

Nifty50 managed to surpass crucial resistance levels in a single trading session and is on track to hit a higher target towards 11,400, say experts. India VIX fell by 0.95 percent at 15.63 levels which should comfort bulls.

Bank Nifty comparatively remained range bound but managed to extend its gains towards 27,400 zones. It formed a Bullish candle and entering its crucial hurdle of 27,500-27,750 zones.

“Finally Nifty50 appears to have registered a decisive breakout as it signed off the session with a decent bullish candle above its 45-day old consolidation range placed between 10,987–10,530 kind of levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“Interestingly, last 30 days of move appears to be inside a channel and based on this channel breakout in Wednesday’s session a higher target of 11,370 can be projected for the said index whereas logical target for this entire rally from the lows of 10,004 appears to be placed around 11,400 levels,” he said.

Mohammad further added that Nifty can be expected to rally towards the zone of 11,370–11,408 levels in course of time if Thursday’s monetary policy outcome doesn’t disappoint the market fraternity.

“Traders are advised to remain long with a stop below 10,980 levels on a closing basis and look for a bigger target placed around 11,400 levels,” he said.

On the options front, maximum Put OI is placed at 10,700 followed by 10,400 and 10,900 strikes while maximum Call OI is placed at 11,000 followed by 11,200 strikes.

Significant Put writing is seen at 11,000 and 10,900 strikes while Call writing is seen at 11,300 and 11,400 with Call unwinding in 10,800 and 10,900 strikes. Options band signifies a trading range between 10,900 and 11,200 zones, suggest experts.

“The Nifty index managed to surpass its multiple hurdles of 10,985 after the consolidation of last two series and witnessed a strong momentum towards 11,070 zones. It started the session with a breakaway gap as it opened with gap and closed with the gains of around 130 points,” Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.

“It formed a strong Bullish candle similar to a Bullish Marubozu candle and has been making higher lows from last six trading sessions. Now it has to continue to hold above 10985 zones to extend its move towards 11176 zones while on the downside support exists at 10880 and 10820 zones,” he said.

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