Technical View | Nifty form bullish candle, experts say 16,746 crucial to upmove


The Nifty ended higher second day in a row on July 28 on positive global cues, boosted by an overnight rally in the US market after the Federal Reserve raised interest rates by 75 bps along expected lines.

After opening 130 points higher at 16,775, the index extended the rally to reclaim 16,900, recouping losses of July 25 and 26 and also surpassing its previous top of July 22.

It closed 287.80 points, or 1.73 percent, higher at 16,929.60 and formed a bullish candlestick on the daily charts, indicating that the bulls have an upper hand.

If the index holds the day’s low of 16,746 as well as the bullish gap zone area of 16,642-16,775 in the coming sessions, it can move towards its 200-day moving average (17,030), experts said.

Also read: Gainers & Losers: 10 stocks that moved the most on July 28

The index gained on buying across sectors, with IT leading the charge gaining 2.8 percent followed by financial services with 2.4 percent gains. The Nifty metal index rose 1.7 percent.

“…a follow-through is needed in the next couple of sessions without violating 16,746 levels on a closing basis. In that scenario, an initial hurdle can be its 200-SMA, whose value is present at around 17,030 levels,” Mazhar Mohammad, Founder & Chief Market Strategist, Chartviewindia, said.

If the index sustains above the said hurdle, it can move towards 17,500, he added.

Also read: Foreign funds flow turns positive in July after 10 months. Have outflows bottomed out?

On the downside, the expiry session’s bullish gap present between 16,746 and 16,653 shall act as a strong support zone.

Considering the strength in the index, any weakness in the next session can be an opportunity for positional traders to go long but technically, stop-loss level will remain below 16,740 on a closing basis, the market expert said.

Oscillators are also playing a supportive role not only on the daily chart but also on weekly and monthly scales, indicating bullish sentiment.

The relative strength index (RSI) remained above the 60 mark at 69 levels and the Stochastic has already given a positive crossover, trading near 98 levels.

The moving average convergence and divergence remained in an uptrend on the daily charts, indicating the trend is up. On the weekly scale, it has given a positive crossover, though below the zero line.

Volatility also cooled down further. The India VIX, which gauges the expected volatility in the market, fell 6.16 percent to 17.01 levels.

Banking index

The Bank Nifty also saw a gap-up opening at 37,102 and extended rally to hit the day’s high of 37,414.

It closed 594 points, or 1.62 percent, higher at 37,378 and formed a bullish candle on the daily charts. On the monthly scale, there was bullish engulfing candle formation.

“The index remains in a buy mode with immediate support at the 37,000-36,800 zone. The next hurdle is placed at 38,000, where a significant amount of Call writing has been witnessed. The RSI remains in a buy zone as long as it is trading above the level of 60,” Kunal Shah, Senior Technical Analyst at LKP Securities, said.

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