Technical View: Nifty forms Inside Bar pattern, 14,800 crucial for further upside


The Nifty50 started the week and the month on a solid note, trading higher throughout the session to rally 1.6 percent on March 1 after a steep correction in the previous session. India VIX also fell sharply by 8.94 percent from 28.14 to 25.62, which experts say could give some stability to the market.

Encouraging thrid quarter GDP numbers, February auto sales and steady PMI manufacturing data along with optimism over US stimulus seen in the global markets lifted the sentiment.

After opening gap up at 14,702.50, the Nifty hit an intraday high of 14,806.80 and low of 14,638.55 amid volatility. The index settled at 14,761.50, up 232.30 points or 1.60 percent.

The index formed a bullish candle that resembles Inside Bar pattern on the daily charts  as the Nifty traded within the previous day’s range. Experts say 14,800, which was the intraday high on March 1, could act as a crucial level for further upside .

As the near-term trend is seen sideways, positional traders with a high-risk appetite can consider shorting as the Nifty nears 14,900, with a stop above 14,920 on a closing basis and look for a modest target in the zone of 14,700 – 14,650, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.

“It appears to be the day of consolidation on the bourses as the Nifty50 respected the low of preceding session and traded inside the ‘Long Black Day’ formation registered on last Friday, which depicted inside Bar kind of formation,” Mohammad said.

If the bulls manage to keep the index above 14,800 in the next session, intraday strength can expand to 14,900, whereas 14,638 can be considered as near-term support, as a breach can weaken the index to 14,450 levels, he said.

For the time, larger trend would remain sideways between 14,900 and 14,450 in the near term unless the bulls manage a sustainable close above 14,920.

On the options front, maximum Put open interest was seen at 14,000 followed by 13,500 strike while maximum Call open interest was at 16,000 followed by 16,500 strike. The data indicates that the Nifty could see a wider trading range of 14,200-15,000.

The Bank Nifty opened gap up at 35,374.25 and moved in a range of 600 points. The index closed the session with gains of 492.40 points at 35,296. It formed a Doji candle on the daily scale as it closed near its opening levels.

“The Bank Nifty has to cross and hold above 35,500 to witness a bounce towards 36,000 and 36,250, while on the downside, support is seen at 35,000 then 34,500 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On the stock front, bullish setup was seen in Motherson Sumi, Bharat Electronics, Apollo Tyres, Grasim, UPL, TVS Motor, NMDC, Vedanta, L&T Finance Holdings, Siemens, Voltas, Ramco Cements, BHEL, Cummins India and Bharat Forge. Weakness was seen in Bharti Airtel, Bank of Baroda and Indus Tower, he added.