Technical View: Nifty forms small bearish candle, consolidation likely to continue


The Nifty remained highly volatile throughout the session and erased early gains to close marginally high on the first day of the week, March 8. Weak Asian peers and US futures and rising oil prices weighed on sentiment.

The Nifty50 opened higher at 15,002.45 and hit an intraday high of 15,111.15, but turned volatile and touched the day’s low of 14,919.90. The index finally settled with 18.10 points gains at 14,956.20.

The index formed a small bearish candle on the daily chart, as the closing was below opening levels. The consolidation is expected to continue till the Nifty breaks the critical hurdle of 15,273, experts said.

Traders should remain neutral on the Nifty on the long side, whereas a shorting opportunity should be considered below 14,860, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

“The Nifty50 appears to be on a consolidation mode as trading session remained listless and volatile with a 190-point range. However, realtively longer upper shadows of the last three trading sessions with small and negligible candle bodies may be hinting at impending weakness which shall be confirmed with a close below 14,862. In such a scenario, on weakness below 14,862, correction shall get accentuated with an initial target of 14,628 levels,” Mohammad said.

According to him, if the bulls manage to defend 14,900 on a closing basis, then they will continue to make efforts to breach the near-term critical hurdle of 15,273. “In this regard, some strength and stability should be expected if the Nifty closes above 15,100 levels,” he said.

India VIX fell by 3.46 percent from 25.56 to 24.67 levels. It has remained in a broader range of 21.80 to 29.64 for the last 10 trading sessions.

On options 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 15,600 then 15,500 strike, while Put writing was seen at 15,000 then 14,500 strike.

The options data suggested that a wider trading range for Nifty could be 14,500-15,500, while the immediate range could be between 14,750 and 15,250.

The Bank Nifty opened positive at 35,462.45 but after a volatile start, it moved in a consolidative manner. After moving in a high-low range of 35,827.30-35,090.75, it concluded the day with gains of 47.60 points at 35,275.80.

The index formed a bearish candle on the daily scale but negated its formation of lower highs-lower lows of the last two sessions. “The Bank Nifty has to cross and hold above 35,500 to witness a bounce towards 36,000 and 36,250 levels, 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 UPL, GAIL, Cummins India, BHEL, NALCO, L&T, Torrent Power, PFC, IRCTC, Tata Chemicals, Vedanta, IOC, HCL Technologies, Axis Bank and Infosys. Weakness was seen in Apollo Tyres, TVS Motor, Jubilant Foodworks, Pidilite Industries, Shriram Transport Finance, Manappuram Finance and HDFC, he added.