Technical View: Nifty forms bullish candle, traders with high risk appetite can buy on dips


The Nifty50 gained momentum in late morning deals after volatility, and extended gains to hit a record high near 14,600 mark on January 12 despite RBI’s caution over elevated NPA levels in current year. PSU banks and auto stocks led the rally.

The index ended at record closing high for third consecutive session and formed bullish candle on the daily charts as closing was higher than opening levels, indicating the likely consistency in uptrend. The index continued the formation of higher highs from the last fourteen trading sessions.

Experts feel the momentum can take the Nifty upto 14,750 levels, but the rising volatility ahead of Union Budget could act as a spoiler.

Mazhar Mohammad of feels except overbought readings on momentum oscillators, no other technical parameter is hinting at weakness in the ongoing upmove. Hence, he advised traders with high risk appetite can consider buying into intraday dip, if any, into the zone of 14,500 – 14,470 levels with a stoploss below 14,430 and look for a possible target placed around 14,700 levels.

India VIX was up by 2.09 percent from 22.38 to 22.84 levels. “Volatility is moving upwards because of rising Call implied volatility and now it needs to cool down below 20 zones to form the higher market base,” Chandan Taparia of Motilal Oswal said.

The Nifty50 opened flat at 14,473.80 and turned volatility to hit an intraday low of 14,432.85, but the buying same dip helped the index recover losses and extended rally to hit an intraday record high of 14,590.65 in afternoon. It closed at 14,563.50, up 78.70 points.

“Bull party continued on the bourses as Nifty50 appears to have resumed its uptrend post indecisive formation of last Monday. As momentum is strong, the index shall remain positively biased, as long as Nifty sustains above 14,432 levels. In that scenario bulls can extend their upward journey into the zone of 14,690 – 14,750 levels in the next trading session,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.

Contray to this, some pause accompanied with intraday correction can be expected if the index slips below 14,432 levels, according to him.

On option front, maximum Put open interest was at 14,000 followed by 13,000 strike while maximum Call open interest was at 15,000 followed by 14,000 strike. Call unwinding was seen at immediate strike with minor Call writing at 15,000 while Put writing was seen at 14,500 then 14,400 strike.

The abovementioned option data indicated that the Nifty could see an immediate trading range of 14,300 to 14,800 levels.

Bank Nifty opened negative at 31,835.05 but saw quick recovery in the initial half of the day with the support of 31,750 levels. The second half saw rangebound move and the banking index settled with gains of 340.10 points at 32,339.

It formed a Bullish engulfing candle on daily scale and given a recent highest daily close. “Now it has to continue to hold above 32,000 to witness an upmove towards 32,613 and 33,000 while on the downside support is seen at 31,750 and 31,500,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.

Positive setup was seen in Tata Motors, Bank of Baroda, Tata Chemicals, Ashok Leyland, Piramal Enterprises, Cholamandalam Investment, Eicher Motors, Coal India, SBI, Exide India, Bharti Airtel, Wipro, Federal Bank, Escorts, HDFC Bank, Hero MotoCorp, Bharat Forge, Indraprastha Gas and ICICI Bank while weakness was seen in Titan, Nestle India, HUL, Kotak Mahindra Bank, Divis Labs and InterGlobe Aviation, he said.