Technical View | Nifty forms bullish candle for yet another week, experts say 17,900 can be possible target


The Nifty50 gained more than 300 points for yet another session on March 17 and closed above the 200-day simple moving average (16,991), forming a bullish candle on the daily charts.

Stable oil prices, in-line 25 bps hike in interest rate by the US Federal Reserve, and rally in global markets come together to push the market higher. The market will be closed for Holi on March 18.

The Nifty opened above 17,200 and hit the intraday high of 17,345. It traded strong throughout the session and closed at 17,287, the highest since February 17, up 312 points or 1.84 percent.

The index gained 4 percent in the week. On the weekly charts, there was robust bullish candle formation for the second consecutive week, indicating the index might have formed the bottom at recent lows and may be ready for further upmove towards 17,900-18,000 but could see not before seeing some consolidation and profit booking, experts said.

The volatility fell more than 6 percent to close at 22.61 after declining over 9 percent in the previous session, aiding the market rally. India VIX, the fear index,  dropped 33 percent from its recent high of 34 levels.

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“The last eight trading sessions’ rally from the lows of 15,671 added around 1,673 points, leading to two back-to-back strong bullish candles on the weekly charts. This perhaps is hinting at a durable bottom around recent lows of 15,671,” said Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.

Based on the 37-day downsloping channel breakout, registered on March 14, a higher target of 17,900 cannot be ruled out, he said.

Also read:Gainers & Losers: Five stocks that moved the most on March 17

But due to the sharp rally of the last few sessions, a pause for one or two days, due to profit-booking, cannot be ruled out. The current positive outlook, however, would be negated if the Nifty closes below 16,990.

Any dips will remain an opportunity to create fresh longs, said Mohammad.

The trading range indicated by the option data also moved higher significantly. Experts expect the Nifty to trade in 16,800-17,700 range in the coming session.

On the options front, maximum Call open interest was seen at 18,000 strike followed by 17,500 strike, while maximum Put open interest was witnessed at 16,000 strike followed by 16,500 strike.

Call writing was seen at 17,300 strike then 17,400 strike while marginal Put writing was visible at 17,000 strike then 16,800 strike.

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Banking index

The Bank Nifty also opened gap up at 36,302 and heavyweight private banking stocks pushed the index above the 36,600-mark. The index closed 680 points, or 1.9 percent, higher at 36,429.

It formed a small-bodied bullish candle on the daily scale and made higher highs, higher lows from the fourth session.

The index formed a bullish candle on the weekly frame, as it gained 5.4 percent during the week.

“The Bank Nifty negated its lower highs–lower lows formation of the last five weeks. Now it has to hold above 36,250 levels, for an up move towards 36,750 and 37,000 levels, whereas support can be seen at 36,000 and 35,500 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

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On the stock front, there was a positive setup in Trent, Coromandel International, Piramal Enterprises, HDFC, SRF, United Spirits, Titan Company, JSW Steel, Asian Paints, Adani Enterprises, Tata Consumer Products, Kotak Mahindra Bank, Reliance Industries, Tata Steel, Cholamandalam Investment, Bajaj Auto, Sun Pharma, Bharti Airtel, SBI and Vedanta.

Weakness was seen in AU Small Finance Bank, Glenmark Pharma, Dabur India and Jubilant Foodworks, he said.

The broader markets also continued their upward march, as the Nifty Midcap 100 index gained 1.4 percent and smallcap 100 index rose 1.2 percent.

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