Technical View: Nifty forms bullish candle, may move towards record high

January 09
17:29 2020

The Nifty50 saw a thumping gap up opening and maintained upward momentum throughout the session on January 9 as bulls made a strong comeback on easing geopolitical tensions between US and Iran.

The index closed above the psychological 12,200 level and formed a bullish candle on daily charts.

The index erased last three sessions of losses, which indicated that near term bottom is in place around Wednesday’s low of 11,929 level and it may make an attempt to move towards an earlier record high of 12,293.90 in coming sessions.

The Nifty50 opened sharply higher by 128 points at 12,153.15 and marched further as the day progressed to hit an intraday high of 12,224.05. The index finally settled at 12,215.90, up 190.50 points or 1.58 percent driven by buying across sectors barring IT (wherein TCS, Mindtree and HCL Technologies were under pressure).

“The index bridged the bearish gap registered on January 6 which is present between 12,179–12,191 levels. Hence, sustaining above 12,132 levels, bulls may once again make an attempt to push the index into uncharted territory beyond its lifetime high of 12,293 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

He said contrary to this, a failure to sustain above 12,132 levels on closing basis shall lead to consolidation for couple of sessions which may result in bridging today’s bullish gap present in the zone of 12,132–12,044 levels.

Nevertheless, as of now, any dip into this gap zone of 12,132–12,044 can be considered as an opportunity to create fresh longs, he added.

Mazhar Mohammad advised traders to make use of the weakness in next couple of sessions to go long around 12,100 and remain optimistic as long as Nifty sustains above 12,040 levels on closing basis.

India VIX fell sharply by 10.50 percent at 13.99 level.

A sharp cut in VIX levels provided comfort to the bulls but overall volatile swings are likely to continue in the near term, experts feel.

On options front, maximum Put open interest was seen at 12,000 followed by 11,500 strike, while maximum Call open interest was at 12,500 followed by 12,300 strike.

Marginal Call unwinding was seen at immediate strike price while Put writing was seen at 12,200 then 12,100 strike.

Bank Nifty opened gap up and witnessed strong buying interest throughout the session to extend its gains towards 32,200 level. The index closed 2.29 percent higher at 32,092.40 and formed a bullish candle on daily scale, negating the formation of lower highs after four trading sessions.

“It regained sharply from lower zones and managed to hold above 32,000 level. Now it has to hold above 31,750 to witness an upmove towards 32,500-32,600 while on the downside supports are seen at 31,500 then 31,250 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services 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.

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