Technical View: Nifty forms Doji candle, consolidation seen if index fails to go past 14,788


The Nifty50 saw consolidation and closed flat on March 22 as banking & financials came under pressure, while FMCG, IT, metals and pharma supported the market on a volatile day.

The index closed near the opening level and formed a Doji pattern on the daily charts. A Doji candle indicates indecisiveness among the bulls and the bears; bounces were being sold in the absence of follow-up buying interest. The index has to decisively surpass 14,788 to break the consolidation range, say experts.

The Nifty50, which opened lower at 14,736.30, hit an intraday high of 14,763.90 and low a of 14,597.85. It fell a percent intraday before recovering in the last hour of trade to close at 14,736.40, down 7.60 points.

Short-term traders should wait for a decisive move beyond 14,790 levels to go long for an initial target of 14,950 by placing a stop below intraday low, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

“It seems to be the day of consolidation on the bourses as the Nifty50 remained volatile with a 166-point trading range. Hence, in the next trading session, if the Nifty fail to get past 14,788 levels then a sideways move between 14,788–14,350 levels can be expected till monthly expiry which is two trading sessions away,” Mohammad said.

If the index breaches 14,597 on the downside, it can weaken further by slipping to the lower end of the consolidation range, he said.

As of now, upside is getting capped around the index’s 50-day simple moving average which is at around 14,650. If 14,788 is cleared, then strength shall initially expand towards 14,875–14,950 levels, he said.

India VIX was up by 2.51 percent from 19.99 to 20.49 levels.

On the options front, maximum Put open interest was seen at 14,500 followed by 14,000 strike, while maximum Call open interest was at 15,500 followed by 15,000 strike. Call writing was seen at 15,500 then 15,000 strike, while Put writing was seen at 13,600 then 14,700 strike. The data indicates that the Nifty could see a wider trading range of 14,350-15,000 for the coming sessions.

The Bank Nifty opened negative at 34,088.40 and weakness pulled the index to 33,389 levels in the frst half of the session. However, some recovery was seen but the index ended the day 558.20 points, or 1.63 percent, lower at 33,603.40.

The index has been underperforming the Nifty from the last few sessions. “It formed a bearish candle on the daily chart but negated its formation of lower highs of the last five trading sessions. Now it needs to hold above 34,000 to witness a bounce towards 34,500 and 35,000 levels, while on the downside support is seen at 33,333 and 33,000 levels,” Chandan Taparia, Vice President | Retail-Research at Motilal Oswal Financial Services said.

On the stocks front, a bullish setup was seen in Adani Enterprises, Adani Ports, Cholamandalam Investment, Godrej Consumer Products, United Breweries, Britannia, Dabur, ITC, TCS, HUL, ACC and JSW Steel. Weakness was seen in IndusInd Bank, PVR, NMDC, L&T Finance and Bajaj Finance, he added.