Technical View | Nifty forms bullish candle, 17,400 next target if uptrend continues


The Nifty reversed the previous day’s losses to close 1.5 percent higher on April 26 on positive global cues with all sectors participating in the rally.

After opening higher at 17,121, the index remained in a positive terrain throughout the session, though in the afternoon it came off the day’s high to drop to the day’s low of 17,064. The index extended the rally in late trade to settle 247 points, or 1.5 percent, higher at 17,201.

The index formed a bullish candle on the daily chart after two bearish candles. Positive global cues lifted sentiment. All sectors participated in the rally, with auto, FMCG, metal, pharma and banks emerging as big gainers.

The index bridged the bearish gap and closed above the psychologically important 17,000-mark as well as the day’s low of 17,064, which experts said could act as near-term support. If the Nifty holds 17,064 in the coming sessions, it can move beyond 17,400, they said.

For the traders who want to initiate long positions, the ideal stop-loss would be below 17,064, Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

The last couple of sessions caught the traders off guard, with frequent gap down (or up) openings, apart from the sudden intraday reversals in both directions. Hence, it becomes challenging to extrapolate the trend for the next trading session, he added.

As per the options data, the trading range for the Nifty has improved to move a bit higher to 16,900-17,400 from 16,700-17,300 levels.

On the options front, maximum Call open interest was seen at 17,500 strike followed by 17,800 strike, while maximum Put open interest witnessed at 17,000 strike followed by 16,400 strike.

Marginal Call writing was seen at 17,550 strike, while Call unwinding was seen at 17,000 strike, whereas Put writing was seen at 16,400 strike then 17,200 strike.

Volatility also cooled down significantly but needs to fall way below the 18-mark to make the bulls comfortable. India VIX declined 9.73 percent to 19.19, though it rose to 21 during the day.

Banking index

The Bank Nifty opened gap up at 36,515 and remained in a 350-point range. PSU banks participation was higher than that of private banks in the Bank Nifty, which closed 322 higher at 36,405 but underperformed the broader markets.

The index formed a small-bodied bearish candle on the daily scale.

“It has to hold above 36,250 to sustain up move towards 36,666 and 37,000 levels, whereas supports are placed at 36,000 and 35,750 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.

The broader market performed better than the Bank Nifty. The Nifty midcap 100 index was up 1.6 percent and smallcap 100 index gained 1.2 percent.

On the stock front, Taparia said positive setup was seen in Cholamandalam Investment, Adani Ports, Bajaj Auto, TVS Motor, Hero MotoCorp, Adani Enterprises, M&M Financial, Power Grid Corporation, City Union Bank, M&M, Page Industries, Titan Company, Bata India, Bajaj Finance, Reliance Industries, IndusInd Bank, L&T Finance Holdings, MRF, Tata Consumer Products, SBI and Ambuja Cements.

Weakness was seen in ONGC, L&T Infotech, Apollo Hospitals Enterprises, Indian Hotels, Mphasis, Hindalco Industries and GAIL, he added.

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