Technical View: Nifty forms bullish candle, 14,570 decisive for strength
The Nifty50 wiped out some of the gains in afternoon trade but managed to close a percent higher on April 26, forming a bullish candle on the daily charts as the closing was higher than opening levels.
Banking & financials and metals stocks led the rally. Broader markets also traded higher, with the Nifty midcap 100 index rising 0.78 percent and smallcap index 1.13 percent.
India VIX moved up by 3.55 percent from 22.69 to 23.49 levels. India VIX needs to hold below the 20-mark for the market to remain bullish, experts say.
Traders should remain neutral on the long side, whereas positional shorting opportunity may arise on a close below its 100-day moving average, whose value is placed at around 14,390, for a modest target of 14,200, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
The Nifty opened in the green at 14,449.45 and extended gains to hit the intraday high of 14,557.50. It erased some of the gains but still closed in the green, rising 143.60 points or 1 percent to 14,485.
“Despite a strong opening, the Nifty50 appears to have registered a weak candlestick formation, by the end of the day, as intraday trading range remained narrower with 136 points. Moreover, it seems to have encountered selling pressure as it entered into the bearish gap area present between 14,526 – 14,559 levels,” Mohammad said.
In the next session, further upside should not be expected unless the Nifty sustains above 14,560. Intraday weakness will be confirmed if the Nifty trades below 14,390, Mohammad said.
For a sustainable upmove, the Nifty needs a close above 14,570 and in such a scenario, strength shall initially expand towards 14,700 levels, he said.
On the options front, maximum Put open interest witnessed at 14,000 strike followed by 13,500 strike, while maximum Call open interest was reported at 15,000 followed by 14,800 strike. Call writing was seen at 14,900 then 14,950 strike, while Put writing was seen at 14,500 and 14,400 strike. The data suggests a wide trading range of 14,200 and 14,800 for the Nifty.
The Bank Nifty opened gap up at 32,316.65 but could not hold above 32,500 and remained in a range of 250 points for the most part of the session. It formed a Doji candle on daily scale but continued forming higher highs from the last four sessions, experts said.
“The Bank Nifty has to continue to trade above 32,250 for an upmove towards 32,750 and 33,000, while on the downside, support can be seen at 32,000 and 31,750 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On stocks front, bullish setup was seen in SAIL, ICICI Prudential Life Insurance, Axis Bank, Vedanta, JSW Steel, Cummins India, Pidilite Industries, NMDC, Mindtree, Bajaj Auto, Adani Enterprises, Petronet LNG, Aarti Industries and Tata Consumer Products. Weakness was seen in M&M Financial, HCL Technologies, Dabur, L&T Finance Holdings and Marico, he added.