Technical View: Nifty forms bullish candle, be cautious until index closes above 15,100

India

The Nifty50 traded higher for major part of the session and closed on strong note for the second consecutive session on March 2 after Friday’s mayhem. Buying in auto stocks post February sales data, FMCG, IT, select metals and pharma stocks aided the rally.

The index formed bearish candle on the daily charts as closing was higher than opening levels. Experts advised to maintain caution till the index decisively closes above 15,100 levels in the coming sessions.

Meanwhile, Mazhar Mohammad of Chartviewindia advised traders to remain neutral on index by shifting their focus on stock-specific opportunities.

The Nifty50 opened higher at 14,865.30 and remained largely volatile with positive bias. The index hit a day’s high of 14,959.10 in late trade and closed at 14,919.10, up 157.60 points or 1.07 percent.

The volatility sharply dropped further which also supported the bullish bias. The India VIX was down by 7.86 percent from 25.62 to 23.60.

“Despite bulls making an impressive attempt to rally into the bearish gap zone of 14,919 – 15,065 levels, registered on last February 26, 2021, one needs to be cautious as this pull back attempt may get faltered unless Nifty closes above 15,100 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

“Despite this pull back from the lows of 14,467 levels, none of the ‘reliable’ momentum oscillators generated a buy signal on lower time frame charts hinting that index is not yet completely out of the woods. Hence, at this juncture, the best strategy can be to remain neutral on the long side unless some more strength is visible on the index with a close above 15,100 levels,” he said.

In the next trading session, if the index manages to get past 14,959 levels then intraday strength may get extended into the zone of 15,065 – 15,100 levels whereas weakness can be expected if it slips below 14,850 levels, according to him.

On 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. Call writing was seen at 15,400 then 15,500 strike while Put writing was seen at 13,900 then 14,600 strike. Option data indicated that the Nifty50 could see an immediate trading range of 14,700 to 15,150 levels for the coming sessions.

Bank Nifty opened gap up at 35,458.15 but failed to hold above 35,750 and drifted lower to hit a day’s low of 35,002.45. However, it witnessed a decent recovery from lows and settled the day with gains of 123.70 points at 35,419.70.

The index formed a Doji kind of candle on daily scale as it closed near its opening levels but emergence of long lower shadow indicates that declines are being bought.

“Now Bank Nifty has to continue to hold above 35,000 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 (MOFSL) said.

On stocks front, bullish setup was seen in BHEL, Tata Motors, Wipro, Max Financial Services, Adani Ports, Bharat Electronics, NTPC, Infosys, Cholamandalam Investment, Jubilant Foodworks, TCS, Cummins India, Voltas, TVS Motor, Grasim and Siemens while weakness was seen in Dr Reddy’s Labs, Manappuram Finance, ACC and Bank of Baroda, Taparia added.

The broader markets also joined the rally as the Nifty Midcap 100 index gained 1.7 percent and Smallcap 100 index was up 1.24 percent on positive breadth. About three shares advanced for every two declining shares on the NSE.