Technical View | Nifty forms bullish candle on RBI policy eve, resistance at 17,536


The Nifty extended the previous day’s gains, rising nearly 200 points on February 9 heading into the Reserve Bank of India’s bi-monthly policy review being closely watched for a rate hike and growing concerns over inflation.

The RBI’s monetary policy committee will announce its interest rate decision on February 10 after a three-day meeting.

After opening higher at 17,370.10, the Nifty gained strength in the afternoon trade to climb to 17,477.15 before winding up the session at 17,463.80 with 197 points or 1.14 percent gains. Nifty February futures closed with gains of 1.24 percent at 17,487 levels.

The Nifty formed a bullish candle on the daily chart, as the closing was higher than opening levels. The index may face resistance around 17,536 and crossing it decisively in the coming session could see it move towards 17,600.

India VIX, which measures the expected volatility in the market, declined by 5.72 percent to 18.55 levels, continuing the downtrend for the second consecutive session.

“Volatility needs to further cool down for stability and dominance of bulls in the market,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

Also read: Taking Stock | Market gains for the second day, all eyes on MPC meeting outcome

Though the index appears to have staged a strong pullback as it rallied around 400 points, none of the crucial momentum oscillators generated a buy signal. “Hence, the Nifty may have some resistance at its near-term hurdle of 17,536 levels,” said Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.

If the bulls manage to push through that hurdle, strength in the index can extend to 17,643. A close below the bullish gap zone of the day present between 17,339 and 17,306 can weaken the upward momentum, Mohammad said.

For the time, short-term traders with long positions in the index should consider profit-booking around 17,500. “Fresh buying shall arise on a dip towards 17,350, with a stop-loss below 17,300.”

Also read: Gainers & Losers: 5 stocks that moved the most on February 9

The broader markets also participated in the run, with the Nifty Midcap 100 index gaining 1.14 percent and the smallcap 100 index 0.4 percent.

The options data indicated that the Nifty could trade in a range of 17,200-17,600 in the immediate term. There was a maximum Call open interest at 18,000 strike then 17,500 strike, while maximum Put open interest was seen at 16,500 strike then 16,000 strike.

Marginal Call writing was seen at 17,800 then 17,700 strike, while Put writing was seen at 17,250 then 17,400 strike.

Banking index

The Bank Nifty, a bunch of 12 stocks, opened gap-up at 38,283.60 and remained in the positive direction to hit an intraday high of towards 38,648.

A rally in 11 of the 12 stocks helped the index settle 581.85 points, or 1.53 percent, higher at 38,610.30. It formed a bullish candle on the daily scale.

“The Bank Nifty has to hold above 38,500 levels to witness an up move towards 38,850 and 39,000, whereas support is seen at 38,250 followed by 38,000 levels,” said Taparia.

On the stock front, a bullish setup was seen in NALCO, Coal India, Tata Chemicals, Adani Enterprises, Maruti Suzuki, Cholamandalam Investment, IOC, Aditya Birla Fashion, Federal Bank, InterGlobe Aviation, Bajaj Auto, IndusInd Bank, Ashok Leyland, Hindalco, Hindustan Aeronautics, Siemens, HDFC Bank and AU Small Finance Bank. Weakness was seen in Mahanagar Gas, ONGC, Godrej Consumer Products, Zee Entertainment and GAIL, he said.

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