Technical View: Nifty forms Spinning Top candle, experts say traders can book profits
After rallying for seven straight sessions, the market took a break today as banks, metals, select auto and FMCG stocks witnessed selling pressure. The Nifty50 retreated sharply from the intraday record high. It closed moderately lower as compared to May 31 closing level.
The index formed bullish candle which resembles Spinning Top kind of pattern on the daily charts. Spinning Top is often regarded as a neutral pattern that suggests indecisiveness in the market. It can be formed in an uptrend as well as in a downtrend.
Experts feel 15,660 is expected to remain a crucial level for further strength in the market, while 15,374 could act as a support in the near term.
The volatility index rose today after falling consistently in previous sessions, but still remained below the crucial 20-mark. India VIX moved up by 2.95 percent from 16.88 to 17.38 levels.
The Nifty50 opened higher at 15,629.65 and extended gains to hit a fresh intraday record high of 15,660.75, but later in the day wiped out gains to trade lower for the rest of the session barring a single attempt in afternoon to turn in green that also failed immediately. The index finally settled lower by 7.90 points at 15,574.90.
“Nifty50 registered Spinning Top kind of indecisive formation as bulls fail to sustain at higher levels. Hence, unless Nifty gets past 15,660 in next session further strength shall not be expected whereas weakness may persist on intraday basis if it slips below 15,528 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
On strength beyond 15,660, strength may get extended towards 15,750 levels, he feels.
However, critical short term support is placed at 15,374 levels which can act as a trend deciding level, he said. In case if this critical support is breached on closing basis then bearish sentiment can be strengthened triggering much needed corrective downswing, according to him.
“On the indicator/oscillator front our twin momentum oscillators generated a sell signal post today’s price action. Hence, we expect the index to remain either sideways or initially move down towards 15,374 levels in next couple of trading sessions,” he said.
Therefore he advised traders to book profits in index and remain cautious even on stock specific front.
On option front, maximum Put open interest was at 15,000 followed by 14,500 strike while maximum Call open interest was at 16,000 followed by 15,800 strike. Minor Call writing was seen at 16,100 then 15,700 strike while Put writing was seen at 15,500 then 15,000 strike.
Option data suggested that the Nifty could see an immediate trading range of 15,300 to 15,800 levels in coming sessions.
Bank Nifty opened positive at 35,639.75, but failed to hold above 35,700 and remained negative to rangebound for the day. It failed to continue its positive streak of last four sessions and closed the day negative with the loss of 189.45 points at 35,337.20.
The index formed a bearish candle on daily scale but has been forming higher highs from the last four sessions. “Bank Nifty has to hold above 35,250 to witness an upmove towards 35,750 and 36,000 zones while on the downside support is seen at 35,000 and 34,750 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On stocks front, bullish setup was seen in Adani Enterprises, Adani Ports, ONGC, Bajaj Finance, LIC Housing Finance, Apollo Hospitals Enterprises, SBI, Mindtree, Coforge, Marico, HDFC, HUL and Container Corporation while weakness was seen in Sun TV Network, Aurobindo Pharam, L&T Finance Holdings, Bank of Baroda, M&M Financial, Ashok Leyland and Ramco Cement, he added.