The Nifty recouped losses amid volatility in the last hour of the trade to close above 15,700 on July 2, forming a hammer pattern on the daily charts. Select banking & financials, technology, and Reliance Industries supported the market.
For the week, the index was down 0.9 percent and formed a bearish candle that resembled a Bearish Belt Hold pattern on the weekly scale.
The hammer is a bullish reversal pattern formed after a decline. It consists of no upper shadow, a small body, and a long lower shadow. The long lower shadow signifies that a bounce back after testing support, where demand is located.
A ‘Bearish Belt Hold’ pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the day making up the large body. The candle will either have a small or no upper shadow and a small lower shadow.
Considering the day’s volatile move, traders should remain neutral in the next session by shifting focus towards stock-specific opportunities, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
The Nifty opened moderately higher at 15,705.85 and hit the day’s low of 15,635.95 amid volatility in the morning. The index recovered losses in the last hour of trade to hit an intraday high of 15,738.35 before closing with gains of 42.20 points at 15,722.20.
“… a bearish candle, which resembles a Bearish Belt Hold, with a narrow weekly range of 280 points is witnessed on weekly charts, which is a cause for concern,” Mohammad said.
It will be critical for the index to sustain above 15,680, at least on a closing basis, to retain positive bias, though trend may continue to remain sideways, he said.
If the bulls manage to push the index beyond 15,755 in next session, strength shall expand towards 15,839, whereas inability of bulls to sustain above 15,700, on intraday basis, may once again push the index towards 15,600, he said.
India VIX fell further by 5.84 percent from 12.84 to 12.09 levels, the lowest level in 18 months. “Lower volatility indicates a range bound move but at the same time decline could be bought,” said Chandan Taparia of Motilal Oswal.
On the options front, maximum Put open interest was seen at 15,500 followed by 15,000 strike while maximum Call OI was seen at 16,000 followed by 16,500 strike. Call writing was seen at 16,100 then 16,200 strike, while Put writing was seen at 15,000 then 15,500 strike.
The data indicates that the Nifty could see an immediate trading range of 15,600 to 15,900.
The Bank Nifty opened positive at 34,728.10 and moved in a zig-zag fashion through the day. Banking stocks were lackluster and the index lacked momentum. It gained 125.90 points to close at 34,809.90, forming a small-bodied bullish candle on the daily scale. The index formed a bearish candle on the weekly scale as it lost 1.6 percent during the week.
“Bank Nifty continues forming lower highs – lower lows from the last four sessions. Now it has to hold above 34,750 to move up towards 35,000 and 35,250 levels while on the downside support is seen at 34,500 and 34,250 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stock front, a bullish setup was seen in Tata Chemicals, Manappuram Finance, SRF, Aurobindo Pharma, Divis Labs, Apollo Hospitals, Reliance Industries, Balkrishna Industries, Dr Lal Pathlabs, Deepak Nitrite, Torrent Pharma, ICICI Prudential, Tata Consumer Products and Pidilite Industries. Weakness was seen in Adani Enterprises, Tata Steel, JSW Steel, Power Grid, Britannia, PFC and L&T, he said.
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