The Nifty failed to hold on to its immediate resistance of 16,750 due to profit booking at higher levels to end off the day’s high, resulting in a Bearish Belt Hold pattern on the daily charts.
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.
Hence, “in the next couple of trading sessions, it remains critical for the index to sustain above the day’s bullish gap zone placed between 16,447 and 16,418 levels,” said Mazhar Mohammad, Founder & Chief Market Strategist at ChartviewIndia.
Cooling of oil prices, the rally in Asian counterparts and the BJP marching ahead of rivals in four of the five state elections supported the market sentiment.
The Nifty opened more than 400 points higher at 16,757.10, which was also the day’s high, but selling pressure at higher levels saw the index drop to 16,447.90, the day’s low. The Nifty settled at 16,594.90, up 1.53 percent, gaining for the third consecutive session.
Unless the Nifty closes above 16,820, further strength cannot be expected, Mohammad said. “In that scenario, strength shall initially extend towards 17,000 levels,” he said.
The inability of the bulls to sustain above 16,418 on a closing basis can lead to sharp profit-booking, he said. For the time, it would be prudent to remain neutral on the index unless it closes above 16,820.
Also read: Market ends higher for the third day, 5 factors that supported the sentiment
The volatility index fell 6.87 percent to 25.58 levels, which also supported the market. For markets to stabilise, India VIX, the fear index, should drop to around 20, experts said.
On the option front, there was a maximum Call open interest at 18,000 strike followed by 17,000 strike, while maximum Put open interest was seen at 16,000 strike then 15,500 strike.
Marginal Call writing was seen at 16,800 strike followed by 16,700 strike, while marginal Put writing was seen at 16,000 strike then 15,800 strike. This data indicates a wider trading range for the Nifty at 16,000 to 17,000 levels in coming sessions.
Also read: Gainers & Losers: Five stocks that moved the most on March 10
Banking index
The Bank Nifty opened gap up at 35,154 and hit the day’s high of 35,374 but failed to hold the gains and slipped to 34,218.
It recovered some of the lost ground in the last hour of the day and closed 660 points higher at 34,476, forming a bearish candle on the daily scale, as the closing was lower than the opening level.
“Now it has to hold above 34,000 levels, for an up move towards 34,750 and 35,000 whereas support can be seen at 33,750 and 33,333 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the stocks front, positive setup was seen in Adani Enterprises, Cholamandalam Investment, DLF, Tata Steel, SBI, United Spirits, JSW Steel, Jindal Steel & Power, Tata Consumer Products, Colgate Palmolive, Page Industries, L&T Technology, Tata Chemicals, PVR, Vedanta, Reliance Industries, Divis Labs, Hindalco Industries and Cipla, he said. Weakness was seen in Coforge, Gail, Coal India and Petronet LNG.
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