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Technical View: Nifty reclaims 11K to form strong bullish candle, next target seen at 11,100

August 08
18:29 2019

The Nifty50 gained in late hour of trade on short covering and reclaimed psychological 11,000 mark on August 8 after a media report indicated a likely rollback of surcharge on foreign portfolio investors.

After opening higher at 10,899.20 in the morning, the Nifty immediately started slipping to hit an intraday low of 10,842.95. The index recouped the losses and remained rangebound till the sharp recovery in the last hour of trade. It closed 177 points, or 1.63 percent, higher at 11,032.50.

The index saw biggest gains in absolute terms since May 24 and formed strong bullish candle, which indicates that the sentiment-driven rally may have further fresh leg of upswing, if it decisively holds five-day exponential moving average (EMA), experts say.

“Nifty50 registered a strong bullish candle perhaps on the back of short covering owing to likely rollback of surcharge on FPIs. However, in today’s session Nifty didn’t violate intraday low of 10,835 registered on August 7, which is a key positive technical development. Moreover today’s close is decisively above its five-day EMA whose value is placed at 10,972,” Mazhar Mohammad, Chief Strategist, Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

The Nifty appeared to have unleashed a fresh leg of upswing, which could initially lead the indices towards its 200-day EMA whose value was around 11,271 level, he said.

Besides, last four days of consolidation with intraday lows of around 10,800 level, the market appeared to have registered a short-term bottom, Mohammad added.

He advised that the traders with higher degree of confidence level could initiate fresh longs now and on dips around 10,900 level, and look for initial target of 11,250. The positive outlook would get negated if Nifty slipped below 10,800 level, he warned.

On the Options front, maximum Put open interest is at 11,000 followed by 10,700 strike, while maximum Call open interest is at 11,500 followed by 11,300 strike.

Minor Call writing is at 11,400 strike, while Put writing is at 11,000 followed by 10,800 strikes. Option data suggests that Nifty could trade in a range between 10,800-11,300 zones.

India VIX fell marginally by 1.95 percent to 16.09 level.

The broader markets also participated in the rally but could not match the gains seen by the benchmark indices. The Nifty Midcap index was up 0.7 percent and Smallcap index rose 1 percent.

The Nifty Bank also saw a trend similar to the Nifty50 and decisively reclaimed 28,000 level. The index closed at 28,110.45, up 408.40 points and formed bullish candle on daily scale.

“Immediate support for Nifty Bank is coming near 27,850-27,600 zone and resistance is coming near 28,350-28,500 zone,” Gaurav Bissa, AVP Derivatives & Technicals at LKP Securities, said.

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