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Technical View: Nifty forms a bearish candle, but experts remain optimistic

November 26
18:28 2019

The Nifty50 started the November 26 session on a ceremonious note hitting its all-time high. However, the index succumbed to selling pressure as investors chose to book profit after a 2-day rally. Major selling was seen in auto, technology, metals and PSU banks.

The index closed marginally above 12,000 levels and formed bearish candle on daily charts.

India VIX fell by 1.08 percent at 14.83 levels. Now VIX needs to continue to hold below 15 levels to surpass the recent highs and to extend the fresh high territory.

Despite correction from record-high levels, experts remained positive on the market as the Nifty still holds its crucial support of 12,000 which has a strong open interest concentration.

The Nifty50 crossed its earlier record high in opening trade itself as it started the day at 12,110.20 and hit an intraday high of 12,132.45, the all-time high, but profit booking pulled the index lower in the second half to day’s low of 12,006.35. It closed at 12,037.70, down 36.10 points.

“It appears to be the day of consolidation on the bourses as profit booking appears to have kicked in from the uncharted territories as Nifty registered a new landmark with an intraday high of 12,132 levels. However, lack of follow-through to strong price action of last Monday shall remain a slightly worrying sign,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said as there are no apparent sell signals or weakness on the lower time frame charts, traders need to maintain an optimistic outlook and shall look to buy as long as Nifty sustains above 11,919 levels. Breach of this can induce more selling pressure.

If the index is able to sustain above the said levels, eventually, momentum shall take it to the zone of 12,300–12,350 kinds of levels where critical resistance on long term charts is placed, he added.

He said in case if Nifty slips below 12,006 levels in the next session then initially it should slide towards 11,940 levels where best buying opportunity is available with a stop below 11,919 on closing basis. Hence, he advised traders to buy the dip and maintain a stop loss below 11,919 on closing basis for all long positions.

Nagaraj Shetti, Technical Research Analyst at HDFC Securities also feels today’s profit booking from the all-time high is not showing any alarming signal for a trend reversal.

“Further buying is likely to emerge from near 12K support in the next 1-2 sessions. A sustainable move above 12,150 levels could open some more upside in the near term,” he added.

Nifty Bank was seen outperforming Nifty for the major part of the day. The index witnessed a strong dip but was seen bouncing after retesting the breakout zone of 31,450 levels and hit an intraday record high of 31,850.35.

The index ended at record closing high of 31,718.35, up 0.51 percent and formed Doji candle on daily charts as it closed near its opening levels.

“Going ahead, the index is expected to continue its trend as long as it holds 31,700 and can test 31,900-31,950 levels,” Gaurav Bissa – AVP Technical and Derivatives at LKP Securities said.

Chandan Taparia, Vice President and Analyst-Derivatives at Motilal Oswal Financial Services said the downside support was placed at 31,500 then 31,200 levels.Get 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.

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