Technical View | Nifty forms bullish candle, has to hold 17,000 for upmove

Representative Image

Representative Image

The Nifty closed 140 points higher at 17,123.60 on October 12 after three straight days of losses but experts say for the upmove to sustain, the index will have to hold on to the psychologically vital 17,000 mark in the coming days.

The index, which took a beating in the previous session, got support at the 200-day moving average (16,987) to bounce back. It formed a bullish candle or Inside Bar kind of pattern on the daily charts as the closing was higher than opening levels. Most sectors participated in the rally, with banking and FMCG making the biggest gains.

“Bears took a breather today as markets witnessed a relief rally after getting hammered in the past few sessions. However, the recovery doesn’t seem to be sustainable as multiple negative factors are at play,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

Technically, the Nifty took support near the 200-day simple moving average and bounced back sharply. As long as the index trades above 17,000, the pullback formation is likely to continue.

Above it same, the index can touch 17,225-17,275, the market expert said. On the flip side, a slip below 17,000 can take the index to 16,900.

Also read: Taking Stock | Market snaps 3-day losing streak; Sensex up 479 points, Nifty above 17,100

The broader markets also settled higher despite negative breadth. The Nifty midcap 100 and smallcap 100 indices rose 0.6 percent and 0.8 percent. About 1,060 shares declined against 914 advancing shares on the NSE.

India VIX, which indicates the expected volatility in the market over the next 30 days, was down 1.53 percent to 20.18 levels, giving some comfort to the bulls.

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

The Call writing was seen at 17,500 strike followed by 17,000 with unwinding at 18.000 strike, while marginal Put writing was seen at 17,000 and 16,900 strike.

As per the data, the Nifty may trade in the 16,800-17,300 range in the coming sessions.

Also read: Gainers & Losers: 10 stocks that moved the most on October 12

Banking index

The Bank Nifty opened positive at 38,784 and kept north the entire session. The index closed near the day’s high up 406 points at 39,119 and formed a bullish candle on the daily scale.

It has to hold above 39,000 to move towards 39,500 and 39,750, whereas supports are placed at 38,750 and 38,500, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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