Technical View: Nifty forms bearish candle, may extend losses if index fails to climb 15K


The Nifty50 wiped out gains in afternoon trade and closed moderately lower on March 16, forming a small bearish candle on the daily charts. The rising coronavirus infections, higher oil prices and FIIs as well as DIIs outflow dented sentiment.

The bearish candle gets formed when the closing is lower than opening levels. Experts expect the selling pressure to extend if the index fails to come back above the crucial 15,000-mark in the coming sessions.

Mazhar Mohammad of Chartviewindia advise intraday traders to create short positions below 14,890 levels and look for a modest target of 14,750 levels.

The Nifty50 opened higher at 14,996.10 and hit an intraday high of 15,051.60, but witnessed selling pressure in the afternoon to hit a day’s low of 14,890.65. The index closed 19 points lower at 14,910.50 levels.

“Nifty50 remained listless as it traded in a narrow range of 160 points before signing off the session with a small bearish candle. However, in this process it seems to have broken down below the 20-day exponential moving average (14,955) which was offering some cushion to this counter on the downside,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

According to him, in next one or two trading sessions, if the bulls fail to push the index beyond 15,000 levels on closing basis then the trajectory of this market shall remain in the southern direction with initial targets being the test of 50-day simple moving average whose value is placed around 14,720 levels.

Contrary to this, trading bias can change sideways to positive provided bulls manage a sustainable close above 15,000 levels, he said.

India VIX declined by 4.90 percent from 21.22 to 20.19 levels. A fall in VIX below 20 levels is required for bullish grip and smoother move in the market, Chandan Taparia of Motilal Oswal Financial Services (MOFSL) feels.

Option data suggests Nifty could trade in a range of 14,700 to 15,200 levels in the coming sessions. Maximum Put open interest was seen at 14,000 followed by 14,500 strike while maximum Call open interest was seen at 16,000 followed by 15,500 strike. Call writing was seen at 15,000 then 15,400 strike while Put writing was seen at 14,800 then 14,600 strike.

Bank Nifty opened positive at 35,352 but has been moving southwards since its opening levels. Even though it respected its immediate support levels and did not breach yesterday’s low, a clear trend needs to emerge, experts feel.

The index underperformed the Nifty index and settled the day with losses of 377.95 points or 1.07 percent at 34,804.60, forming a bearish candle on daily scale with negligible shadows.

“Bank Nifty has to cross and hold above 35,000 to witness an upmove towards 35,500 and 36,000 levels while on the downside support is seen at 34,500 then 34,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at MOFSL said.

On stocks front, bullish setup was seen in Asian Paints, Mindtree, Apollo Hospitals, M&M Financial, Torrent Power, Mphasis, L&T Infotech, Coforge, HCL Technologies, HUL, Cholamandalam Investment, PFC, TCS, Motherson Sumi, Britannia and Dabur while weakness was seen in IDFC First Bank, PNB, Sun TV Network, IOC, ICICI Prudential, ICICI Bank, SBI, Cipla and L&T, he added.