Technical View: Nifty forms Long White Day candle on Budget day; experts say index can march towards lifetime high


The Nifty50 rebounded sharply with a 5 percent gains on February 1 snapping the six-day losing streak as investors cheered Budget proposals made by Finance Minister Nirmala Sitharaman.

The stellar rally was driven by banking & financials, auto and metals stocks. The index closed decisively above 14,200 levels and formed a large bullish candle which resembles Long White Day pattern on the daily charts.

Experts expect the bullish momentum to continue in the near term but small profit booking can’t be ruled out after a sharp rally.

Mazhar Mohammad of advised short term positional traders to buy the dip around 14,150 levels and look for an initial target of 14,521 with a stop below 14,000 on closing basis.

After the Budget, the volatility has fallen from highs and now needs to fall below 20 mark for the attempt towards new lifetime high. India VIX dropped by 7.96 percent from 25.34 to 23.32 levels.

The Nifty50 opened strong at 13,758.60 and extended gains as the day progressed to hit a high of 14,336.35. The index closed 646.60 points or 4.74 percent higher at 14,281.20.

“Lack of negative surprises in the Budget appears to have triggered a huge short-covering rally, especially in financials, owing to which Nifty witnessed a historic single-day gain of close to 5 percent which depicts a Long White Day formation,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.

Post this up-move, bulls can remain confident that near term bottom is in place at the recent low of 13,596 levels. Hence, dips can be considered as an opportunity for creating fresh long positions, he advised.

“While the initial target for this leg of upswing can be a retest of life highs present around 14,753 levels, some profit booking in next trading session can’t be ruled out as individual stocks across the board witnessed huge surge along with the indices,” he said.

In next trading sessions, if bulls manage to push the index beyond 14,336 levels, upswing may expand to 14,521.

On option front, maximum Put open interest was seen at 13,000 followed by 13,500 strike while maximum Call open interest was at 15,000 followed by 14,500 strike. Option data suggested that the index could see a wider trading range of 13,800 to 14,700 levels.

Bank Nifty opened gap up at 30,976.35 and saw the index touching its life-time high levels of 33,305. The banking index registered its highest intraday gains by sky rising and closing with gains of 2,523.60 points or 8.26 percent at 33,089.10.

All the banking stocks peaked and bullishness continued throughout the day. The index formed a strong bullish candle on the daily scale and continued its formation of higher top – higher bottom seen since the last two sessions.

“Bank Nifty has to hold 32,500 to witness an up-move towards 33,333 and 34,000 levels, while on the downside, support is seen at 32,000 and 31,750 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Positive setup was seen in ICICI Bank, SBI, Cummins India, Ashok Leyland, DLF, SAIL, L&T, AXIS Bank, UltraTech Cement, Grasim, Titan, Bosch, Bharti Airtel, Container Corporation, Voltas, Shriram Transport Finance, Bajaj Auto, NALCO and TVS Motor. Meanwhile, weakness was seen in UPL, Dr Reddy’s Labs, Cipla, Lupin and Mcdowell, he added.