Technical View: Nifty forms bearish candle; experts see 14,455 level as critical short term support


The Nifty 50 opened lower and remained in a tight bear grip for the entire session on March 24, leading to a selloff across sectors amid rising COVID-19 cases in the country and weak global cues.

The index has formed a bearish candle on the daily charts with a closing lower than opening levels. Experts feel the index has to hold the crucial support level of 14,455 to avoid sharp selling pressure in the coming days.

The broader markets also witnessed a steep fall with Nifty Midcap 100 index and Smallcap 100 index down 2 percent each.

Mazhar Mohammad of Chartviewindia expects upsides to remain capped for the time being around the 20-day exponential moving average (14,830) where Nifty faced resistance in last Tuesday’s session. He advised intraday traders with a high-risk appetite to consider going short below 14,561 levels and looking for a modest target of 14,450 by placing a stop above intraday high.

The Nifty 50 opened lower at 14,712.45 and remained under pressure to hit a day’s low of 14,535. The index finally closed with 265.40 points or 1.79 percent loss at 14,549.40.

“Bulls disappointed as Nifty 50 has given up all the gains witnessed in last Tuesday’s session with a gap down opening perhaps owing to weak global cues. Hence, in the next trading session if the index trades below 14,561 levels for atleast 30 minutes then the weakness may initially extend towards 14,455 levels which seems to be critical short term support,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

He pointed out that Nifty seems to be moving in a descending channel for the last 25 days after hitting a high of 15,431 levels on February 16 with support for the next session placed around 14,430 levels. Hence, it is critical for the index to sustain above support zone of 14,450 – 14,430 levels, he said.

According to him, in case, if bulls fail to hold on to the support zone then it will eventually lead to the test of recent corrective swing low placed around 14,350 levels.

After consoliations for last few days, India VIX rose sharply by 8.69 percent from 20.66 to 22.45 levels. Options data indicated a lower trading range for the Nifty could be around 14,350 to 14,800 levels.

On the options front, 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 15,300 strike. Call writing was seen at 14,700 then 14,600 strike while marginal Put writing was seen at 14,300 then 14,350 strike.

Bank Nifty opened gap-down at 33,894.70 and continued its weakness till the end of session to hit a day’s low of 33,203.40. It has been underperforming the broader index over the past few sessions hitting a hurdle at its 50 DEMA over the last four trading sessions.

The index formed a bearish candle on daily scale and closed the day with losses of 891.10 points or 2.61 percent at 33,293.30. “Now it needs to cross 33,500 to witness a bounce towards 34,000 and 34,500 levels, while on the downside support is seen at 33,000 and 32,500 levels,” Chandan Taparia, Vice President | Retail-Research at Motilal Oswal Financial Services said.

Among stocks, bullish setup was seen in Asian Paints, Cipla, Aurobindo Pharma, Marico, Pidilite Industries and Tata Consumer Products while weakness was seen in Motherson Sumi Systems, RBL Bank, Tata Steel, Tata Motors, PNB, M&M Financial, Indiabulls Housing Finance, Hindalco, Exide Industries, Bharat Electronics, Zee Entertainment, PVR, IndusInd Bank and Bharat Forge, he added.