Technical View: Nifty forms bullish candle, be cautious ahead of penultimate day of March FO expiry


The Nifty50 traded higher for major part of the session on March 23 barring noon wherein it saw some selling pressure. However, the index remained rangebound to close above 14,800 levels. Banking & financials helped the index gain half a percent and it witnessed a bullish candle pattern on the daily charts as the closing was higher than opening levels.

Experts expect the volatility to continue in the coming sessions given the expiry of March derivative contracts on Thursday.

Mazhar Mohammad of Chartviewindia advised traders to remain focussed on stock-specific opportunities rather than chasing index moves until a decisive close above 15,000 is witnessed.

The Nifty50 opened higher at 14,768.55 and corrected in late morning deals to hit a day’s low of 14,707, but the index recovered losses in the beginning of afternoon and extended gains to hit an intraday high of 14,878.60. It saw some selling pressure in late trade, but finally settled with gains of 78.40 points at 14,814.80.

“Albeit Nifty50 registered a bullish candle with a comfortable close above its 50-day simple moving average, whose value is placed around 14,770 levels, trading range for the day remained volatile and narrower with late spike in post luncheon session which resulted in a narrow candle,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

He feels sustaining above 14,707 levels is critical for bulls in the next session, to show some strength in the near term. In that scenario, the rally may get extended up to 14,959 levels which is the 62 percent retracement of last leg of fall from the highs of 15,336 to 14,350 levels, he said.

Nevertheless, according to him, the choppy trade can be expected to continue on the index as larger trend is sideways and traders may remain cautious ahead of penultimate day to the monthly expiry.

The option data indicated that the Nifty could see a wider trading range of 500 points around 14,500 to 15,000 levels. Maximum Put open interest was seen at 14,000 followed by 14,500 strike while maximum Call open interest was seen at 15,000 followed by 15,500 strike. Call writing was seen at 14,900 then 14,800 strike while Put writing was seen at 14,800 then 14,700 strike.

India VIX rose by 0.85 percent from 20.49 to 20.66 levels. Chandan Taparia of Motilal Oswal Financial Services feels the fall in VIX below 20 levels is required for bullish grip and smoother move in the market.

Bank Nifty opened positive at 33,747.95 and continued building strength for most part of the session. It touched a high of 34,360 which is near its 50 DMA and settled the day with gains of 581 points or 1.73 percent at 34,184.40.

“The index negated the formation of lower highs of last six trading sessions and formed a bullish candle on daily scale. 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 33,500 and 33,333 levels,” Chandan Taparia, Vice President | Retail-Research at MOFSL said.

On the stocks front, bullish setup was seen in Adani Enterprises, InterGlobe Aviation, ACC, UltraTech Cement, Ambuja Cements, Max Financial Services, Titan Company, Tata Consumer Products, Mcdowell, Axis Bank, DLF, Berger Paints, United Breweries and Pidilite Industries while weakness was seen in Power Grid, GAIL, Zee Entertainment, Indus Towers, M&M, PFC and Hero MotoCorp, Taparia added.