Technical View: Nifty forms bullish candle, risk-taking traders can consider fresh longs

Technical View: Nifty forms bullish candle, risk-taking traders can consider fresh longs
July 14
19:28 2021

After the initial hour of volatility, the Nifty gained strength and extended gains to close higher on July 14, supported largely by IT stocks.

The index formed a small bullish candle on the daily chart as the closing was higher than opening levels.

Positional traders with a high-risk appetite to consider fresh longs if the Nifty sustains above 15,900 for at least one hour and look for a target of 16,200 by placing a stop below intraday low, Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at told Moneycontrol.

The Nifty opened flat at 15,808.70 and hit an intraday low of 15,764.20 but gained strength to hit the day’s high of 15,877.35 in the afternoon. The index finally settled at 15,854, up 41.60 points.

“The Nifty continued its listless way of trading but with a positive bias which resulted in a small bullish candle with a range of 113 points. Hence, in the next session if it manages to sustain above 15,764 levels then bulls can make an attempt to emerge out of the consolidation range present between 15,900 – 15,600 levels,” Mohammad said.

According to him, if the bulls manage a strong close above 15,900 in the next session, a sustainable rally can be witnessed with initial targets of 16,200.

Their failure to sustain above 15,764 shall weaken the bullish sentiment, which may once again drag it down towards the lower end of the sideways range present around 15,600, he said.

India VIX fell 0.24 percent from 12.62 to 12.59 levels. “The decline in VIX has again given stability to the market to commence the next move,” said Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services.

On the options front, maximum Put open interest was seen at 15,500 followed by 15,000 strike, while maximum Call open interest was seen at 16,000 followed by 15800 strike. Minor Call writing was seen at 15,900 then 16,300 strike, while minor Put writing was seen at 15,700 then 15,000 strike. Option data indicated an immediate trading range for the Nifty at 15,700-16,000 levels.

The Bank Nifty opened negative at 35,585.85 and moved in a range for the most part of the session. It surpassed its previous day’s high levels but failed to hold above 35,800 and closed the day at 35,668.30, down 5.10 points.

The index formed a bullish candle on the daily scale, forming higher highs – higher lows from the third session in a low. “The Bank Nifty has to hold above 35,500 to move up towards 36,000 and 36,250, while on the downside, support is seen at 35,350 and 35,000,” said Taparia.

On the stocks front, a bullish setup was seen in Mindtree, Wipro, L&T, Mphasis, Jubilant Foodworks, Apollo Tyres, Bharat Electronics, Bata India, Ambuja Cements, Tata Steel, Cipla, Glenmark Pharma, Lupin and Ashok Leyland. Weakness was seen in Indiabulls Housing Finance, Maruti, Mahanagar Gas, Piramal Enterprises, Indraprastha Gas, Canara Bank, Mcdowell and HUL, he added.

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