Technical View | Nifty forms bullish candle, bulls to get more strength on close above 17,457


It was yet another strong and healthy session for the market on April 21 as the Nifty50 gained 1.5 percent on renewed investors’ interest in IT, banks, and financial stocks. However, the relentless selling pressure by FIIs continued amid geopolitical worries, inflation fears, and expected rate hikes by Federal Reserve.

The index also closed higher than opening levels, and hence formed a bullish candle on daily charts after the Bullish Harami Candlestick pattern in the previous session, indicating bulls are in a strong position. Experts feel the index needs to sustain above 17,215, the day’s low, and bridge the bearish gap with a close above 17,457 levels for further sharp up move in the coming sessions.

The index, at close, surpassed 21, 50, 100, and 200-day exponential moving averages (around 17,360, 17,280, 17,240, and 17,180 respectively), which is also a positive indication.

India VIX, the fear index, corrected further, by 4.39 percent, to 17.85 levels, which is another supporting factor for the market.

“Volatility has been falling from the last two sessions which is giving comfort to the bulls and needs to sustain at lower levels for market stability,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

The Nifty50 saw a gap up opening at 17,235 and surpassed the 17,400 mark, to hit the day’s high of 17,415. The index finally closed at 17,393, up 256 points or 1.49 percent.

“Bulls made a strong comeback, as a follow-through to the last Wednesday’s Harami kind of reversal formation giving some kind of confirmation of a near term bottom at a recent low of 16,824 levels,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

Moreover, he further said with Thursday’s move, the index also closed above the 200-day simple moving average (17,185) giving a psychological advantage to the bulls.

However, the index needs to completely bridge the bearish gap with a close above 17,457 levels. In that scenario, “eventually, the strength shall expand towards 17,856 levels,” he said.

Meanwhile, on the downsides, he feels the index needs to sustain above 17,215 levels to retain positive bias. Therefore, for the time being, it looks prudent to buy the dip with a stop-loss below 17,200 levels, Mazhar Mohammad advised.

With the improved sentiment across segments, the option data indicated that a wider trading range for the Nifty50 for coming days, has been shifted higher to 17,000-17,650 levels, from 16,800-17,350 levels earlier.

On the options front, maximum Call open interest was seen at 18,000 strike, followed by 17,500 while maximum Put open interest was seen at 17,000 strike, followed by 17,200 strike. Marginal Call writing was witnessed at 17,500 strike then 17,700 while Put writing was seen at 17,300 strike then 17,000.

Bank Nifty also opened higher at 36,513 and headed above 36,900 levels during the session. It skyrocketed in the second half of the session and closed with gains of 501 points at 36,816, forming a bullish candle on daily scale.

“The index has been forming higher highs on smaller time frame. Now, it has to hold above 36,750 levels to sustain up move towards 37,250 and 37,500 levels, whereas support shifted higher to 36,500 and 36,250 levels,” said Chandan Taparia.

On the stocks’ front, Taparia said the positive setup was seen in L&T Finance Holdings, Jubilant Foodworks, Biocon, Apollo Tyres, Polycab India, Bandhan Bank, Adani Enterprises, Coal India, ICICI Lombard General Insurance, Kotak Mahindra Bank, ACC, Adani Ports, Maruti Suzuki, Havells, Asian Paints, Reliance Industries, Apollo Hospitals Enterprises, Sun Pharma, IndusInd Bank, SBI, AU Small Finance Bank and Grasim.

However, there was weakness in L&T Infotech, PVR, and Cipla, he added.

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