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Technical View: Nifty forms bearish candle, bulls need to close above 14,850 for strong uptrend

Technical View: Nifty forms bearish candle, bulls need to close above 14,850 for strong uptrend
April 06
17:28 2021

After a volatile first half, Nifty remained rangebound in the afternoon session to settle with moderate gains on April 6. The rebound indicated that the market may be optimistic despite the resurgence of COVID cases. The positive global cues also provided support.

The index formed an Inside Bar and a bearish candle along with a long shadow on the daily scale. Experts feel the index needs to get back strongly above 14,850 levels for strength in the market.

Considering monetary policy outcome and the listless behaviour of markets with a negative bias, Mazhar Mohammad of Chartviewindia advised traders to avoid long positions unless Nifty closes above 14,850 levels, whereas, aggressive traders with high-risk appetite can initiate intraday shorts below 14,573 for a target of 14,420 by placing a stop loss above intraday high.

The Nifty50 opened higher at 14,737 and hit an intraday high of 14,779.10, but wiped out gains in to hit a day’s low of 14,573.90 amid consolidation. It showed some recovery in the last hour to close with 45.70 points gains at 14,683.50.

“It appears to be the day of consolidation on the bourses as Nifty remained in a narrow range of 206 points but the price move was completely listless for the major part of last two hours as trading range was confined to almost 30 points. Hence, the market may be heading for a make or break kind of a day in the next trading session which can be prompted by the RBI monetary policy outcome,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.

However, he feels bulls need a close above 14,850 levels to get their mojo back in the near term whereas a close below 14,600 shall set the tone for a sharp decline with initial targets placed around 14,263 levels.

India VIX fell by 1.79 percent from 21.21 to 20.84 levels. Option data indicated that the Nifty50 could see a wider trading range of 14,400 to 15,100 levels in coming sessions.

On option 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 16,000 strike. Call writing was seen at 15,100 then 14,800 strike while Put writing was seen at 13,500 with significant unwinding at 15,000 strike.

Bank Nifty opened positive at 32,915.65 but remained choppy throughout the day. Bears were seen predominant in the banking stocks, however, some recovery was seen in the last hour and settled the day with losses of 177.50 points at 32,501.30.

It formed a bearish candle on a daily scale and making lower highs on the weekly scale from the last four weeks. “Now till Bank Nifty remains below 33,000, weakness and underperformance could continue for the downside move towards 32,000 and 31,500 levels while on the upside hurdles are seen at 33,333 and 33,500,” Chandan Taparia, Vice President | Retail-Research at Motilal Oswal Financial Services said.

On the stocks front, bullish setup was seen in Adani Ports, SRF, Adani Enterprises, Tata Chemicals, Glenmark Pharma, Tata Consumer Products, Cadila Healthcare, Asian Paints, Pidilite Industries, JSW Steel, Ramco Cement, Max Financial Services, UPL, Divis Labs, Apollo Hospitals, Biocon, Dabur, Sun Pharma and Lupin while weakness was seen in Mahanagar Gas, United Breweries, Power Grid, Siemens, Jubilant Foodworks, Escorts, Eicher Motors and Axis Bank, he added.

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