Technical View: Nifty forms bullish candle; 15,000 key support for record highs
Nifty50 extended rally for the second consecutive on May 17 spurred by banking & financials, auto, IT and metal stocks.
The index formed a bullish candle on the daily charts as the closing was higher than the opening. If the index holds 15,043 in the coming sessions, it can march towards previous record high levels, said experts.
India VIX fell by 1.89 percent from 19.60 to 19.24 levels, the lowest close of the last 97 trading sessions since December 18, 2020, which is also supporting the bullish market sentiment.
Mazhar Mohammad of Chartviewindia advised traders to buy the weakness close to 15,000 levels with a stop below 14,938 on a closing basis.
Nifty50 opened gap-up at 15,067.20 and maintained its stride throughout the session to hit a day’s high of 15,137.25. The index rose 184.90 points or 1.24 percent to close at 15,108.10.
“Although Nifty50 appears to have registered a breakout with a gap-up opening above its 50-day old descending channel, intraday trading range remained narrower with 94 points resulting in a small bullish candle which can be a cause for concern,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia told Moneycontrol.
“Going forward, it needs to sustain above today’s bullish gap area present in the zone of 15,043 – 14,938 levels. If this gap zone successfully offers support on dips, bulls can head higher to test their lifetime highs present around 15,431 levels,” he said.
However, weaknesses will return if they fail to defend 14,938 levels on a closing basis, he said.
In the next trading session if Nifty fails to sustain above 15,043 levels then it can attract some intraday selling pressure and such weakness can be an opportunity to create fresh longs in Nifty,.
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 15,500 strike. Call writing was seen at 15,800 and 15,600 strike while Put writing was seen at 15,000 then 14,900 strike. Option data suggests that Nifty could see a wider trading range of 14,700 to 15,300 levels.
Bank Nifty opened gap-up at 33,893.10 and hit an intraday high of 34,142.85, but failed to surpass the previous swing high of 34,287 levels. It remained consolidative for the most part of the sessions near 33,900 levels and formed a Doji pattern on the daily scale.
“Bank Nifty has to hold above 33,750 to witness an up move towards 34,250 and 34,500 levels while on the downside support is seen at 33,500 and 33,333 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stocks’ front, bullish setup was seen in Container Corporation, Ashok Leyland, M&M, HPCL, Jubilant Foodworks, Bajaj Auto, Titan Company, Bajaj Finance, Shriram Transport Finance, Bharat Electronics, Havells, Cummins India, Adani Enterprises, TVS Motor Company, Bharat Forge, Muthoot Finance, Bata India, Adani Ports, LIC Housing Finance, Deepak Nitrite, Voltas, HDFC Bank, Power Grid Corporation and Berger Paints while weakness was seen in Canara Bank, Bharti Airtel, Colgate Palmolive and ITC, he added.