Technical View: Nifty forms strong bullish candle; new all-time highs in the offing?

Representative image

Representative image

Bulls maintained their charge on the D-Street pushing Nifty50 higher by over 2 percent supported by global markets which turned the corner following the sell-off in the week prior. Banking & financials, IT, Metals and Pharma stocks led the upside.

The index formed a bullish candle on the daily charts as closing was higher than opening levels. The support has been shifting higher and experts, given the three-day rally, feel that the index may hit a fresh record high in the coming sessions.

Mazhar Mohammad of Chartviewindia advised traders to remain long for an initial target of 15,430 levels. Beyond that higher targets towards 15,900 can’t be ruled out, he added.

India VIX fell further by 6.40 percent from 23.60 to 22.09 levels, which could be one of the reasons for stability in the market.

The Nifty50 opened gap up at 15,064.40 and gradually extended the rally to hit a day’s high of 15,273.15. The index climbed 326.50 points or 2.19 percent to 15,245.60.

“Dramatic recovery by bulls in the last three trading sessions not only negated the bearish formations but also appears to have brightened up the chances of Nifty50 retesting lifetime highs present around 15,431 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

Moreover, “today’s gap up opening not only facilitated Nifty to comfortably clear its 20-day moving average but also cleared the resistance from its interim top present at 15,176 levels. This should ultimately force the bears to run for short covering on the weekly expiry session on Thursday,” he said.

According to him, any mild dip in the next session owing to expiry related volatility can be an opportunity to create fresh long positions as the trading outlook remains positive unless Nifty closes below 15,000 levels.

On the option 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 15,500 strike. Call writing was seen at 15,700 then 16,100 strike while Put writing was seen at 15,000 then 15,100 strike.

The abovementioned option data indicated that the Nifty could see a wider trading range of 14,800 to 15,700 levels, and an immediate range of 15,000 to 15,400 levels.

Bank Nifty opened higher at 35,754.45 and escalated throughout the day. Banking stocks surged and pulled the index above 36,450 levels. The index settled the day with gains of 948.40 points or 2.68 percent at 36,368.10 and formed a bullish candle on the daily scale, continuing its formation of higher lows of the last three sessions.

“Bank Nifty has to continue to hold above 36,000 to witness a bounce towards 37,000 and 37,250 zones, while on the downside, support is seen at 36,000 then 35,500 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On the stocks front, bullish setup was seen in Indiabulls Housing Finance, L&T Finance Holdings, Federal Bank, Tata Chemicals, InterGlobe Aviation, Tata Steel, Reliance Industries, Tata Power, UPL, Cummins India, IDFCFirst Bank, REC, Torrent Power, Piramal Enterprises, Hindalco, JSW Steel, PFC, DLF, Max Financial Services and Infosys while weakness was seen in Sun TV Network, Baja Auto, Hero MotoCorp and Apollo Hospitals, he added.

(Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd that publishes

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