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Technical View: Nifty forms bullish candle, VIX below 20 supports bullish sentiment

Technical View: Nifty forms bullish candle, VIX below 20 supports bullish sentiment
June 02
18:28 2021
The Nifty50 opened lower at 15,520.35 and extended losses to hit a day's low of 15,459.85, but showed smart recovery in late trade to close 1.3 points higher at 15,576.20.

The Nifty50 opened lower at 15,520.35 and extended losses to hit a day’s low of 15,459.85, but showed smart recovery in late trade to close 1.3 points higher at 15,576.20.

The Nifty50 showed smart recovery of 115 points in the last hour of trade to end in the positive territory on June 2, driven by auto, metals, pharma and select banks stocks.

The index formed bullish candle on the daily charts as the closing was higher than opening levels. Experts feel the index needs to surpass 15,660 levels for strong uptrend towards 15,850 levels.

Mazhar Mohammad of Chartviewindia advised traders to remain neutral on index but considering strongly positive advance-decline ratio, stock- specific opportunities, he said, can be considered.

The volatility below 20-mark remained supportive for the market. India VIX fell by 1.04 percent from 17.38 to 17.21 levels. “Falling VIX could extend the bullish market momentum towards new high territory,” said Chandan Taparia of Motilal Oswal.

The Nifty50 opened lower at 15,520.35 and extended losses to hit a day’s low of 15,459.85, but showed smart recovery in late trade to close 1.3 points higher at 15,576.20.

“Nifty50 smartly recoiled from the intraday low of 15,459 levels before signing off the session with a marginal gain which resulted into the bullish candle. Albeit this recovery, near term trend shall remain sideways between 15,650 – 15,400 levels unless Nifty registers a close above 15,660 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

“For a directional move it needs to emerge out of this range with a fresh breakout in either of the directions,” he said

If bulls manage to push the index beyond 15,660 on closing basis then a higher target close to 15,850 can be expected whereas a close below 15,374 can trigger a corrective downswing with initial targets towards 15,200 levels, according to him.

On option front, maximum Put open interest was seen at 15,000 followed by 14,500 strike while maximum Call open interest was seen at 16,000 followed by 15,500 strike. Minor Call writing was seen at 16,100 then 16,000 strike while Put writing was seen at 15,200 then 15,100 strike.

The above mentioned option data indicated that the Nifty50 could see an immediate trading range of 15,300 to 15,800 levels.

Bank Nifty opened negative at 35,271.60 and even though it faced some resistance in the opening tick, the second half of the session saw strength. The banking index took support at 35,000 levels and closed the session with marginal gains of 36.60 points at 35,373.80.

The index formed a bullish candle on daily scale. “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 Motherson Sumi Systems, Adani Enterprises, Muthoot Finance, RBL Bank, Bharat Forge, Apollo Tyres, Glenmark Pharma, Tata Power, Lupin, Canara Bank, ICICI Prudential Life, Piramal Enterprises, UPL, Voltas, HPCL, IndusInd Bank, Marico, Ambuja Cements and Reliance Industries while weakness was seen in ITC, Dabur, Gail and Aurobindo Pharma,” Taparia added.

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