Technical View: Nifty forms bullish candle, new highs in sight
The Nifty climbed higher from the word go on December 13 and extended the rally as the day progressed, driven by hopes of a US-China trade deal and a swift Brexit with Boris Johnson scoring a big win in the UK election.
Bank stocks also gained after media reports said that Essar Steel payments would start coming in this month. The Nifty PSU Bank index was the biggest gainer, up 4 percent. Nifty metal, auto, IT and realty indices were up 1.6-2.2 percent.
The Nifty closed near the day’s high and formed a bullish candle on daily as well as weekly charts, as the closing value was higher than the opening tick. It ended the week 1.4 percent higher.
The upside for three consecutive sessions after a correction and consolidation indicates that the index may reclaim record high in the coming sessions, experts say. The index is just 72 points away from its life-time high of 12,158.
After opening at 12,026.40, the Nifty extended the rally to hit an intraday high of 12,098.85 in the afternoon and closed 114.90 points or 0.96 percent higher at 12,086.70.
“Nifty50 continued its upsurge with yet another gap up opening before signing off the session with a strong bullish candle. The last three sessions of upmove are hinting at the completion of corrective swing at the recent low of 11,832 levels. As oscillator setup on lower time frame charts is turning bullish sustaining above today’s gap zone of 12,023 – 12,005 levels, the said index shall ideally head towards its life-time highs placed around 12,158,” Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He said, however, considering the fact that the index has erased four sessions of losses from the highs of 12,082 – 11,832 levels in just two sessions, some breather for the bulls can be expected in the next session.
Sustaining above 12,000 is critical, as a close below this may induce some weakness in the index, he added.
For the time, Mohammad advised traders to book profits in the next session and wait for dip towards the 12,023– 12,005 gap zone to initiate fresh long positions.
The options data suggests a wider trading range of 11,900 to 12,200 for the Nifty for the coming weeks.
Maximum Put open interest was seen at 12,000 followed by 11,500 strike, while maximum Call open interest was at 12,000 followed by 12,200 strike. Major Put writing was seen in 12,000 and 12,100 strike, while Call unwinding was seen in 12,000 and 11,900 strikes.
India VIX fell by 0.37 percent to 13.30 levels.
“Lower volatility could continue to provide the support to the index to attract fresh buying interest,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.
The Bank Nifty continued its positive momentum for the third session and headed towards 32,100. The index gained 1.1 percent to end at 32,014.30 and formed a bullish candle on daily and weekly scales. It ended the week 2.14 percent higher.
It has seen a recovery of 1,100 points in the last three sessions to 32,100 levels and regained the price consolidation of the last couple of sessions. “It has formed a bullish setup and a hold above 31,700 could take it towards 32,157 then 32,500 levels. On the downside, important support exists at 31,400 levels,” Taparia said.LIVE NOW… Video series on How to Double Your Monthly Income… where Rahul Shah, Ex-Swiss Investment Banker and one of India’s leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.