Technical View: Nifty forms bullish candle; rally may continue as index firmly holds 12K
The Nifty 50 traded higher right from the start of trade and ended at record closing high on November 27 ahead of the expiry of November futures and options contracts on Thursday. Hope that the government will announce more measures in the coming days to revive the economy also lifted sentiment.
Auto stocks rallied on an expectation that the government will consider new scrappage policy soon while positive developments over the US-China trade deal lifted metals stocks. Banks gained on the hope of a likely rate cut by the RBI next month.
The index closed above 12,100 for the first time, forming a small bullish candle on daily charts. The closing was higher than the opening value, suggesting it could be in a consolidation mode.
As the index consistently holds psychological 12,000 levels, there are fair chances that it could march towards 12,300-12,400 levels in coming days, experts feel.
The Nifty50 opened higher at 12,068.50 and traded within a range of 60 points throughout session. The index touched an intraday high of 12,114.90 and low of 12,055.15, before ending at record closing high of 12,100.70, up 63 points.
“After new lifetime highs, it is making attempts to stabilize above psychological hurdle of 12,000 levels which itself should be read as a key positive sign as the said index managed a close for the third session in a row above such a critical hurdle. Hence, sustaining above this level next target appears to be in the zone of 12,300 – 12,350 kinds of levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
He said on the downsides 13-day exponential moving average (11,963) appears to be a critical short term support as it pulled the indices into upward trajectory after offering support on multiple occasion. Therefore any correction near to this level shall offer a fresh buying opportunity, he added.
At this point in time, Mazhar Mohammad advised positional traders to make use of dip around 12,070 – 12,050 levels to create fresh long positions with a stop below 11,957 on a closing basis and look for a target of 12,300.
Options data suggests that there has been a shift in a trading range for the Nifty to 11,980 to 12,200 levels.
Maximum Put open interest was at 12,000 followed by 11,900 strike, while maximum Call open interest was at 12,100 followed by 12,200 strike. Meaningful Put writing was at 12,100 then 12,050 strike while marginal Call writing was seen at 12,200 then 12,150 strike price.
India VIX remained below 15 levels, falling by 1.50 percent to 14.61 levels.
“VIX needs to continue 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.
In line with the benchmark indices, Bank Nifty too opened with gains and remained in a narrow range throughout the session. The banking index made a new all-time high and ended at record closing high of 31,875.95, up half a percent.
“It is making a higher high for seventh consecutive week, which clearly shows strength in the index. It closed well above the horizontal trend line and the support is now inching higher towards 31,500 – 31,400 levels. On the upside, immediate resistance is placed at 32,200 and 32,400 levels,” Chandan Taparia said.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.