Technical View: Nifty forms bullish candle ahead of FO expiry; positional traders may consider going long


The Nifty50 jumped quite sharply after re-opening in the afternoon, hitting the psychological 15,000-mark on February 24, led by short-covering and value buying in banks after the government allowed all private banks to participate in the government business.

The trading at National Stock Exchange halted for nearly four hours starting at 11:40 am due to a technical glitch. Both exchanges decided to extend trading hours till 5 pm to cover for the loss of time. It was a critical session of trade especially ahead of the expiry of February futures & options contracts tomorrow.

The BSE Sensex rallied more than 1,000 points, while the Nifty50 index rose nearly 2 percent, forming a bullish candle on the daily charts after bearish candles in the previous six sessions.

Experts largely feel the index is still in consolidation mode unless it shows strong closing above the 15,000-mark in coming sessions.

With the twin momentum oscillators generating a buy signal after today’s rally, Mazhar Mohammad of Chartviewindia has advised positional traders to go long in the next session and look for an initial target of 15,271 levels.

The Nifty50 opened higher at 14,729.15, but the trading halted at 11:40 am due to a technical glitch. The trade reopened at 3:30 pm and the index hit an intraday high of 15,008.80 largely due to short covering, before signing off the session at 14,982, up 274.20 points or 1.86 percent.

“Technically, the market is in a consolidation zone between 15,000 to 14,600 levels and due to unanticipated technical glitch at NSE appears to have led to short covering last hour of the session which took the indices towards the higher end of the trading range with a strong bullish candle,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.

In the next trading session, which is also a monthly expiry, if bulls fail to register a close above 15,000 levels then the trend shall continue to remain sideways but bearishness will resume only on a close below 14,635 levels, he feels.

However, a strong move beyond 15,000 levels shall expand the current upswing towards 15,271 levels, he said.

As bulls successfully defended the right technical support point placed around 14,600, positional traders can consider buying the dip with a stop below 14,700 levels on a closing basis, he advised.

India VIX fell by 4.21 percent from 25.23 to 24.16. Option data indicated that the Nifty50 could see an immediate trading range of 14,850 to 15,150 levels.

On the options front, maximum Put open interest was at 14,000 followed by 14,700 strike while maximum Call open interest was at 15,000 followed by 15,200 strike. Put writing was seen at 14,800 and 14,900 strikes while Call unwinding was seen at 14,900 and 15,000 strikes.

Bank Nifty opened gap up at 35,205.40 and witnessed quick buying due to positive action in all the banking stocks. It made an intraday high of 36,567.65 and ended the day with massive gains of more than 1,335.35 points or 3.80 percent at 36,452.30.

The index formed a strong bullish candle on a daily scale and negated its formation of lower highs – lower lows of the last five sessions. “Bank Nifty has to continue to hold above 36,000 to witness an up move towards 37,000 and 37,250 levels while on the downside support is seen at 36,000 and 35,700 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On the stocks front, bullish setup was seen in Axis Bank, HDFC Bank, L&T Finance Holdings, Container Corporation, Federal Bank, ICICI Bank, IDFC First Bank, Indus Tower, Bajaj Finance, SBI, Grasim, Tata Chemicals, L&T, UltraTech Cement, DLF and IndusInd Bank while weakness was seen in Cholamandalam Investment, Power Grid, REC, Dr Reddy’s Labs, Mcdowell, TCS and Indraprastha Gas, he added.