Technical View: Nifty forms bearish candle; experts says crucial for index to stay above 15,680 level


The market stayed in a bear grip for the most part of the session, falling a percent due to weak global cues on July 8. Banking & financials, auto, metals, pharma, and FMCG stocks witnessed selling pressure.

The index formed a bearish candle on the daily charts as closing was lower than opening levels. The index has got stuck in a wider range of 15,450 to 15,915 levels from the last 27 trading sessions and a decisive directional move is missing with the absence of follow up activities.

Mazhar Mohammad of advised intraday traders to short below 15,680 and can look for a modest target of 15,590 levels by placing a stop above intraday high.

The Nifty50 opened lower at 15,855.40 and remained under pressure for the major part of the session to hit a day’s low of 15,682.90. The index fell 151.80 points or 0.96 percent to close at 15,727.90.

“Robust bearish candle after struggling to get past the higher end of the trading range present around 15,900 is strongly hinting that the market may be heading towards the lower end of the trading range placed around 15,600 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at told Moneycontrol.

To prevent further damage, the Nifty needs to sustain above 15,680 levels in the next trading session as a close below that level can strengthen the bearish sentiment further, he feels. “This breakdown shall eventually pave the way for retest of recent corrective swing low present around 15,450 levels which also interestingly placed towards consolidation breakdown target of 15,480 levels,” he said.

Meanwhile on the upside, strength shall not be expected unless Nifty closes above 15,900 levels.

India VIX moved up by 11.06 percent from 12.21 to 13.56 levels. “Sudden spurt in VIX from its multiple months low indicates some caution for short term market action,” said Chandan Taparia of Motilal Oswal.

On option front, maximum Put open interest was seen at 15500 followed by 15000 strike while maximum Call open interest was seen at 16000 followed by 15800 strike. Minor Call writing was seen at 15800 then 15900 strike while Put writing was seen at 15300 then 15200 strike. Option data indicated that the Nifty50 could see an immediate trading range of 15,500 to 15,900 levels in coming sessions.

Bank Nifty opened negative at 35,603.25, failing to hold above immediate hurdle of 35,800 levels and witnessed sustained selling pressure towards 35,134 levels. Though the last hour of the day saw slight recovery, it formed a bearish candle on daily scale with losses of 497.20 points or 1.39 percent at 35,274.10.

“Bank Nifty has to hold above 35,250 to move up towards 35,500 and 35,800 levels 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 Indraprastha Gas, Colgate Palmolive, Ambuja Cements, Eicher Motors, InterGlobe Aviation, Bharat Forge, Godrej Consumer Products and IndusInd Bank while weakness was seen in Tata Motors, SAIL, RBL Bank, JSW Steel, Bank of Baroda, Vedanta, Hindalco, ONGC, Canara Bank, Motherson Sumi, PNB, Cipla and LIC Housing Finance, he added.