Technical View: Nifty falls 1% but forms bullish candle, consolidation may continue


The Nifty50 snapped its three-day gaining streak and closed a percent lower on weak global cues on March 4, but formed a bullish candle on the daily charts as the closing was higher than opening levels. The index defended the psychological 15,000-mark and closed above the same level.

The bullish candle with a bigger shadows on daily scale indicated tussle between bulls and bears in the market. Experts expect the consolidation to continue in the coming sessions and feel the sharp fall is unlikely till the index holds 15,000-mark.

Considering highly volatile and uncertain phase which markets are passing through, Mazhar Mohammad of Chartviewindia advised traders to remain neutral. Nevertheless, positional shorting opportunity shall arise on a close below 15,000 levels whereas strength shall resume above 15,276 levels, he feels.

The Nifty50 opened sharply lower at 15,026.75 and hit the day’s low of 14,980.20. The index immediately showed recovery up to 15,202.35 but failed to surpass previous closing levels. Finally, it settled at 15,080.80, down 164.80 points or 1.08 percent.

“Bulls appear to have been choked by the overnight negative global cues as Nifty opened with a sharp cut. However, it was heartening to see Nifty taking support and stabilising around psychological landmark of 15,000 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

In fact, it seems to have bounced after testing the bullish gap zone present between 14,995 – 14,959 levels, registered on last Wednesday’s session with an intraday low of 14,980, he said. Hence, as long as this support is intact, one can expect Nifty to consolidate in the zone of 15,000 – 15,276 levels, he feels.

Moreover, buoyancy in Mid and Smallcap space paved the way for positive advance-decline ratio, hinting sentiment inside the broader market is still somewhat positive, he said.

India VIX moved up by 9.33 percent from 22.09 to 24.15 levels, after falling for previous three consecutive sessions. “Cool down in VIX below 21-20 levels is required for bullish grip,” said Chandan Taparia of Motilal Oswal Financial Services (MOFSL).

On option front, maximum Put open interest was seen at 14,000, followed by 14,500 strike while maximum Call open interest was at 16,000, followed by 15,500 strike. Call writing was seen at 15,000 strike while Put writing was seen at 15,000 then 14,600 strike.

The above-mentioned option data indicated that the Nifty could see an immediate trading range of 14,900 to 15,400 levels.

Bank Nifty opened gap down at 35,575.65, but managed to recover from its multiple support of 35,500. During the day, it witnessed a bounce towards 36,300, but it failed to hold and drifted lower to close at 35,802.50, down 565.60 points or 1.56 percent.

The index formed a bullish candle on daily scale as the closing was higher than opening levels, but negated 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 36,500 and 37,000 while on the downside support is seen at 35,500 then 35,250 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at MOFSL said.

On stocks’ front, bullish setup was seen in Container Corporation, BHEL, Tata Power, UltraTech Cement, ACC, Apollo Tyres, Cummins India, Federal Bank, Shree Cement, Grasim, Torrent Power, Canara Bank, IDFC First Bank, Havells and DLF while weakness was seen in SAIL, Tata Steel, Vedanta, HDFC, L&T and HPCL, he added.

The broader markets outpaced benchmark indices as the Nifty Midcap 100 index rose half a percent and Smallcap 100 index gained 1.17 percent on positive breadth. About 1,022 shares advanced against 862 declining shares on the NSE.