Technical View: Nifty hits record high to form bullish candle, 15,855 crucial for further uptrend
The bulls remained in control to push the Nifty to a record closing high on July 15, backed by technology, select banking & financial names, FMCG and metals stocks.
The index formed a bullish candle on the daily charts as the closing was higher than opening levels. Experts said 15,855 is expected to remain a crucial level for the index to extend the rally.
As there is a breakout on the price chart, traders should remain long with a stop below 15,850 and look for an initial target of 16,200 levels, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
India VIX fell 2.54 percent from 12.59 to 12.27 levels, which also gives stability to the market to commence the next move.
The Nifty opened higher at 15,872.15 and remained in an uptrend throughout the session to hit an intraday record high of 15,952.35. The index jumped 70.2 points to 15,924.20.
“Technically speaking, the Nifty50 appears to have registered a consolidation breakout, above its range of 15,900–15,600 levels, after a sideways move of 22 trading sessions. Ideally, after such breakouts, the market should witness a sustainable upmove with initial targets of 16,200 levels,” Mohammad said.
However, “as technical indicators/oscillators are still in favour of the bears, there are doubts about the sustainability of this breakout. Moreover, this breakout is on the back of a narrow trading range of 98 points on the back of negative advance-decline ratio which is a cause for concern,” he said.
In the next session, it will be critical that the Nifty stays above 15,855 to retain positive bias, he said.
On the options front, maximum Put open interest was seen at 15,000 followed by 15,500 strike, while maximum Call open interest was seen at 16,000 followed by 16,200 strike. Minor Call writing was seen at 16,300 then 16,200 strike, while Put writing was seen at 15,900 then 15,800 strike. Option data indicated that the Nifty50 could see an immediate trading range of 15,700-16,000-16,200 levels.
The Bank Nifty opened positive, surpassed its immediate hurdle of 35,800 and headed towards 36,000. Heavyweight banking stocks supported the index at higher zones, even though it moved in a range towards the fag end of the session to close 239.40 points higher at 35,907.70. It formed a bullish candle on daily scale.
“The index is forming higher highs – higher lows from the last four sessions. Now it has to hold above 35,800 levels to move up towards 36,250 and 36,500, while on the downside, support is seen at 35,500 and 35,250 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stocks front, bullish setup was seen in HCL Technologies, L&T Infotech, L&T, Ambuja Cements, DLF, Tech Mahindra, Wipro, Hindalco, UPL, ACC, Cummins India, Torrent Power, Voltas, UltraTech Cement, HDFC Bank, Colgate Palmolive, Muthoot Finance, Tata Steel and ITC. Weakness was seen in ONGC, Gail, Indiabulls Housing Finance, RBL Bank, Zee Entertainment, UBL, Eicher Motors, M&M Financial, HPCL and Canara Bank, he added.
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