Technical View: Nifty forms robust bullish candle on weekly charts, consolidation seen


The Nifty50 finally hit the psychologically important  15,000-mark but failed to hold on to it in a volatile day of trade that ended at another record high on February 5. Positive global cues and buying in PSU banks, financial services, metals and pharma stocks supported the market.

The index opened higher at 14,952.60 and hit an intraday record high of 15,014.65 but then turned volatile to the day’s low of 14,864.75. The index settled 28.60 points higher at 14,924.30.

The index continued the uptrend for the fifth consecutive session but formed a bearish candle, which resembled the indecisive Doji pattern on the daily charts. A Doji candle indicates there is some indecisiveness among the bulls and the bears and bounces are being sold in the absence of follow-up buying interest.

During the week, the index gained 9.5 percent and formed a robust bullish candle on the weekly scale.

Experts say the daily chart pattern indicates that there could be some consolidation in the coming sessions and the index may see some profit- booking at around 15,000.

Short-term traders should remain neutral by shifting focus on stock- specific opportunities, Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.

Though Nifty50 formed a robust bullish candle on weekly charts, with an intra week range of 1,353 points, daily charts are hinting at a pause with Doji kind of formation, Mohammad said. The Market should ideally move sideways by slipping into a corrective or consolidation phase, he said.

“While weakness in this regard shall be confirmed with a close below 14,864 levels, upsides may remain capped and shall remain vulnerable for bouts of profit-taking inside the zone of 15,000 to 15,200 levels in the next couple of trading sessions unless the Nifty pauses or undergo some sort of correction,” he said.

The options data indicated that the Nifty may see a wider trading range of 14,500 to 15,200 in the coming sessions.

On the options front, maximum Put open interest was at 14,000 followed by 13,500 strike, while maximum Call open interest was at 15,000 followed by 16,000 strike. Put writing was seen at 14,800 and 14,500 strikes, while Call writing was visible at 15,000 and 16,000 strikes with unwinding at 14,700 strike.

India VIX moved up by 1.28 percent from 23.12 to 23.41 levels.

The Bank Nifty opened gap up 35,634.95 and made a new life-time high of 36,615.20 levels but could not sustain at higher levels. It cascaded and ended the day with gains of 309.70 points at 35,654.50 but lost all its intraday swing of 1,000 points from higher zones.

The banking index has outperformed the broader market since the start of the series and closed the week with around 17 percent gains.

“The Bank Nifty continued its higher top-higher bottom from the last six sessions and formed a bullish candle but a Doji with long upper shadow on daily scale. Now it has to hold 35,000 to witness an upmove towards 36,000 and 36,500 zone, while on the downside support is seen at 34,500 and then 34,250,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On the stock front, a bullish setup was seen in Tata Steel, Divis Labs, Jindal Steel & Power, Kotak Mahindra Bank, BHEL, UltraTech Cement, Lupin, Cipla and HUL. Weakness was seen in L&T Finance Holdings, Tata Motors, RBL Bank, Bharti Airtel, Bata India, United Breweries, Godrej Consumer Products, Gail, Colgate Palmolive, Maruti Suzuki and Marico, he added.