Technical View: Nifty forms Doji pattern; experts advise buying only on a close above 14,900
Nifty50 traded higher throughout the session amid volatility on April 8, backed by metals, IT, select FMCG and auto stocks. The index formed a Doji pattern on the daily charts as the closing was near its opening levels.
A Doji candle indicates there is some indecisiveness among the bulls and the bears and bounces were being sold in the absence of follow-up buying interest. Experts advised buying only if the index decisively closes above 14,900 mark.
Mazhar Mohammad of Chartviewindia advised intraday traders to short below 14,820 levels and look for a modest target close to 14,700 levels. “Buying the index should not be considered unless a strong close is witnessed above 14,900 levels,” he said.
The Nifty50 opened in a positive terrain at 14,875.65 and remained higher throughout the session. The index touched an intraday high of 14,984.15, but wiped out some gains in the last hour of trade to hit a day’s low 14,821.10, before closing 54.80 points higher at 14,873.80
India VIX moved up marginally by 0.31 percent from 20.24 to 20.31 levels.
“Bears appear to be gaining the upper hand with their counter attacks at higher levels as bulls were forced to whipsaw their breakout which otherwise looked to be decisive at one point with an intraday high of 14,984 but the selling pressure in the post luncheon session brought down the Nifty towards its opening point which resulted in an indecisive Doji kind of formation,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
“This kind of behaviour on the part of bulls only add to more uncertainty about upside rallies, he feels. Hence, in the next trading session, if Nifty trades below 14,821 levels it shall correct sharply with initial targets placed around 14,650 levels but that should significantly weaken the bulls’ case in the near term, he said.
Contrary to this, strength can be expected if Nifty manages a strong close above 14,900 levels. Till then, one should prepare for a sideways trend but with a negative bias, Mazhar added.
Option data indicated that the Nifty50 could see a wider trading range of 14,500 to 15,200 levels for coming sessions. 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. Minor Call writing was seen at 15,000 then 15,200 strike while minor Put writing was seen at 14,900 and 14,500 strike.
Bank Nifty opened gap up at 33,154.20, but failed to surpass a key hurdle of 33,333 and drifted lower to hit a day’s low of 32,704.75. Banking stocks witnessed support-based buying but selling pressure towards the end of the session dragged the index to 32,700 levels.
It finally concluded with losses of 208.40 points at 32,782.80 and formed a bearish candle on daily scale.
“Bank Nifty continued forming higher highs from the last two sessions. Now it needs to decisively cross and hold above 33,000 for an upmove towards 33,500 and 34,000 levels while on the downside support is seen at 32,500 and 32,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On the stocks front, bullish setup was seen in JSW Steel, Jindal Steel, SAIL, Tata Steel, Ambuja Cements, ACC, UltraTech Cement, Hindalco, Ramco Cements, NMDC, Titan, Mindtree, Britannia Industries, Marico and Dabur while weakness was seen in Amara Raja Batteries, Indiabulls Housing Finance, Canara Bank, Power Grid Corporation, HDFC Bank and TVS Motor, he added.