Technical View: Nifty forms bearish candle, needs to get support at 14,700 for upside


Extending its losses, the Nifty50 index settled over a percent lower on March 17 as investors adopted a cautious approach ahead of the Federal Reserve meet outcome due later in the day.

The index fell for the fourth consecutive session and formed a bearish candle on the daily charts as the closing was lower than opening levels. Experts feel the index needs to hold on to 14,700 support levels to get a strong bounce back in coming sessions, otherwise further correction looks possible.

Mazhar Mohammad of Chartviewindia advises intraday traders to go short below 14,690 levels and look for a modest target of 14,630 by placing a stop above intraday high.

The Nifty50 opened higher at 14,946.55 and hit a day’s high of 14,956.55, but immediately drifted lower as the day progressed to hit an intraday low of 14,696.05 in late trade. The index settled at 14,721.30, down 189.20 points or 1.27 percent.

“Weakness persisted on the bourses as Nifty50 registered a Bearish Candle with a 260-point wide trading range and went on to test its 50-day simple moving average. In this process it also registered a new corrective swing low from the highs of 15,336 levels strengthening the bearish sentiment further,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia told Moneycontrol.

It is critical for the index to bounce back from the psychological support point of 14,700 levels, but if it fails to do so, then it can initially extend the slide towards 14,630 where minor support is available, according to the expert.

However, strong support for Nifty below 14,700 seems to be placed in the bullish gap zone of 14,469 – 14,336 levels registered on February 2 in response to the Budget, Mohammad added.

Contrary to this, any stability towards 14,700 levels should lead to a minor bounce which should be curtailed around 14,950 levels, he added.

India VIX was marginally down by 0.16 percent from 20.19 to 20.15 levels. Option data indicated that the trading range for Nifty could be 14,500 to 15,000 levels.

On options front, maximum Put open interest was seen at 14,500 followed by 14,000 strike while maximum Call open interest was at 15,000 followed by 16,000 strike. Call writing was seen at 15,000 then 14,800 strike while Put writing was seen at 14,200 then 14,500 strike.

Bank Nifty opened on a positive note at 34,905.05 but slipped later in the day and breached 34,150 levels to hit the day’s low of 34,126.85. Eventually, the index settled with losses of 575.30 points or 1.65 percent at 34,229.30, forming a strong bearish candle on the daily charts.

“The index has been making lower highs from last three trading sessions. Now till it remains below 34,750, weakness could be seen towards 33,500 and 33,333 zones while on the upside key hurdle is seen at 35,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services (MOFSL) said.

On stocks’ front, bullish setup was seen in ITC, InterGlobe Aviation and HDFC while weakness was seen in BHEL, Tata Chemicals, ONGC, Bank of Baroda, Sun TV Network, RBL Bank, Canara Bank, Ashok Leyland, Tata Motors, DLF, Jindal Steel, Federal Bank, PNB, Bharat Electronics, Petronet LNG, Siemens, GAIL, Sun Pharma, Exide Industries, Jubilant Foodworks, IndusInd Bank, Havells, SBI, Cipla and ACC, Taparia added.

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