Technical View: Nifty forms strong bullish candle, closes in on a new high
The Nifty opened the week on a positive note and extended gains as the day progressed to end at a record closing high on November 25. The rally was broad-based with the Nifty Bank, auto, metal, pharma and realty indices gaining 1.5-3 percent.
The growing hope of a US-China trade deal in the coming month, reconstruction of Sensex indices and new developments over divestment to curb fiscal deficit lifted market sentiment. The BSE Sensex touched an intraday record high of 40,931.71 before closing 529.82 points higher at 40,889.23.
The Nifty, after consolidating for the last three weeks, managed to close above its immediate hurdle of 12,035 and was on the verge of making new all-time high.
The Nifty, which is 24.05 points away from its earlier record high of 12,103.05 touched on June 3, formed a strong bullish candle on the daily charts as closing value was much higher than the opening tick.
If the index surpasses its earlier record high and holds those levels for few sessions, then the doors will open for 12,200-12,350, experts say.
The Nifty opened higher at 11,922.45 and gradually extended the to hit the day’s high of 12,084.50. The index ended at record closing high of 12,073.80, up 159.40 points or 1.34 percent.
The Nifty appeared to have embarked on a fresh leg of upswing as it erased the losses of the last two sessions in a single attempt to close above its near-term resistance of 12,038 levels, with a strong bullish candle, said Mazhar Mohammad, Chief Strategist –Technical Research & Trading Advisory, Chartviewindia. “Hence, sustaining above 11,919 levels (Monday’s intraday low), it can easily complete its formality of hitting new lifetime highs placed around 12,103 levels and once it decisively conquers 12,100 levels, then the upswing can get extended towards 12,350 levels,” Mohammad said.
To retain the bullish bias, it is was critical that the index sustained above 11,919 levels below which the momentum would fade away.
For the time being, positional traders are advised to create fresh long positions, with a stop below 11,919 levels on closing basis, and look for a bigger target of 12,300 levels, he said.
The options data suggests a shift in the Nifty’s trading range to 11,900-12,200 levels.
Maximum Put open interest was at 12,000 followed by 11,900 strike, while maximum Call open interest was at 12,000 followed by 12,100 strike. Meaningful Put writing was seen at 12,000 then 11,950 strike, while Call unwinding was seen at immediate strike prices.
Once the index gets into the uncharted territory, 12,270-12,300 will be the target area to watch out for, Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, said. On the flip side, 12,030-12,000 will now act as an immediate support zone, he added.
India VIX rose by 0.89 percent to 15 levels.
Now it needs to hold below 15 levels to surpass the recent highs and to extend the fresh high territory, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
The Bank Nifty witnessed sustained buying interest throughout the session and headed towards 31,600 levels. The index closed 1.43 percent higher at 31,555.90.
It engulfed the price movement of last three trading sessions and formed a big green body candle on the daily chart.
“It has been forming higher highs – higher lows from last seven weeks and supports are gradually shifting higher. Now it has to continue to hold above 31,200 levels to head towards a life-time high of 31,783 then a fresh rally towards 32,000-32,250, while on the downside, major supports exist at 31,000-30,800 levels,” Taparia saidGet access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.