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Technical View: Nifty forms bullish candle, but still in range; 11,973 crucial for major upside

November 19
18:28 2019

The Nifty gained strength in late trade and closed half a percent lower on November 19, largely backed by Reliance Industries, Bharti Group and banks stocks.

Recovery in the last 30 minutes of the session appears to have bailed out the bulls for the day, as the Nifty swiftly rallied from around 11,900–11,958 levels to register a bullish candle on the daily charts.

A bullish candle is formed when the closing value is higher than the opening.

Experts feel unless the index surpasses 11,973 levels decisively, it will be difficult to cross psychological 12,000 mark. Till then they expect rangebound trade to continue.

The Nifty opened higher at 11,919.45 and touched the day’s low of 11,881.75 amid rangebound trade. The index remained positive throughout the session and it gained strength in late trade to hit the day’s high of 11,958.85. The index closed 55.60 points higher at 11,940.10.

“This recovery is on the back of negative advance/decline ratio and heavyweight RIL alone contributed around 42 points to the Nifty, which can be a cause for concern going forward unless the said index gets past 11,973 levels,” Mazhar Mohammad, Chief Strategist, Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

He said in the last three sessions, price action appeared to be in a narrow range of 11,973–11,867, with an indecisive candle formation. Hence, the Nifty may be heading for a breakout in either of the directions and subsequent movement can be swift in the direction of the breakout, Mohammad added.

In view of the volatility, it would be prudent on the part of traders to take a neutral stance on the index and wait for a breakout, he said.

On the upside, a strong close above 11,973 would swiftly take the indices towards life-time highs of 12,103 levels, Mohammad said. A close below 11,865 would result in a breach of recent corrective swing low present around 11,802 levels with a target of 11,700.

India VIX dipped by 2.20 percent to 15.41 levels. VIX needs to hold below 15 levels to surpass the recent highs.

Maximum Put open interest was seen at 11,800 followed by 11,900 strike, while maximum Call open interest was seen at 12,000 followed by 12,200 strike. Some Put writing was seen at 11,900 and 11,800 strikes; while 12,000 Call writers exited some of their short positions.

The above mentioned options data suggests a broader trading range for the Nifty at around 11,800-12,200 levels.

The Bank Nifty opened on a flat note and managed to hold above its previous day’s low. It continued to make higher highs as the day progressed and eventually concluded the session a tad above 31,200- mark.

The banking index continued to outperform the benchmark indices, closing 0.79 percent higher at 31,236.25 and formed a green-body candle on the daily scale.

“The Bank Nifty sustained above its crucial hurdle of 31,200 levels; and thus we may see a continuation in ongoing optimism towards 31,500 and then 31,800 levels; while 30,800 and 30,400 levels remain key support for the index,” Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services, said.

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