Technical View: Nifty forms bearish candle, experts advise traders to avoid fresh longs
The Nifty50 remained lower for major part of the session on February 17 and extended losses in the afternoon trade to close below the crucial breakout point of 15,250 levels. However, the index held the support level of 15,200.
The benchmark index lost more than 100 points amid volatility and formed a bearish candle on the daily charts as the closing was lower than the opening levels.
Experts feel the selling pressure can be extended if it decisively breaks 15,200-mark in the coming session, with next support at 15,000-mark.
As the twin momentum oscillators are in sell mode, Mazhar Mohammad of Chartviewindia.in advised traders to refrain from creating fresh longs whereas intraday traders with high risk appetite can short below 15,170 and look for a modest target in the zone of 15,100 – 15,050 by placing a stop above intraday high.
The Nifty50 opened lower at 15,279.90 and hit an intraday low of 15,170.75 in the afternoon trade. The index signed off the session at 15,208.90, down 104.60 points.
“The recent breakout on Nifty50 appears to have failed as it closed below the breakout point of 15,250 levels. Moreover, last nine trading sessions remained narrower with indecisive formations on charts. As Nifty closed below its 5-day simple moving average, weakness may persist unless it registers a close above 15,313 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
In case the index closes below 15,100, it can be regarded as initial signs of weakness. However, if it closes below 14,977, then it shall accelerate selling pressure by ushering in fresh leg of downswing, the expert said.
In between, it can consolidate in a range of 15,000 – 15,400 levels, Mazhar Mohammad added.
India VIX was down by 1.26 percent from 21.78 to 21.50. Options data indicated that the Nifty could see an immediate trading range of 15,000 to 15,400 levels in the coming sessions.
On options front, maximum Put open interest was seen at 14,000, followed by 15,000 strike while maximum Call open interest was at 16,000, followed by 15,500 strike. Put writing was seen at 15,200 and 15,000 strikes while Call writing was seen at 15,300 and then 15,500 strike.
Bank Nifty opened flattish at 37,041.95 and moved down to hit an intraday low of 36,764.25 levels. It closed near its lower levels with losses of 187.50 points at 36,910.90. It formed a bearish candle on the daily scale with a long upper shadow indicating underperformance and pressure.
“Banking stocks are now taking a pause in the positive momentum and thus the rate sensitive index failed to sustain at higher zones. It negates its formation of higher highs – higher lows of the last three sessions. Now it has to hold above 36,750 levels to witness an upmove towards 37,500 then 37,700 while on the downside, support is seen at 36,500 and 36,250 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services (MOFSL) said.
On the stocks front, bullish setup was seen in Motherson Sumi Systems, Bank of Baroda, Bharat Electronics, HPCL, Hero MotoCorp, Cummins India, Sun TV Network, Piramal Enterprises, SBI, Siemens, Power Grid, Max Financial Services, NTPC, Vedanta and Reliance Industries while weakness was seen in Page Industries, Asian Paints, Maruti Suzuki, IndusInd Bank, Torrent Pharma, HDFC Bank, Dr Reddy’s Labs, Divis Labs, Glenmark Pharma and HUL.
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