Technical View | Nifty hits a new high, forms bullish engulfing candle; more upside likely on close above 18,600

Buzzing Stocks, Slideshow

Buzzing Stocks, Slideshow

The Nifty50 finally hit a new high of 18,611 on November 28, 13 months after its previous best of 18,604, despite weakness in global peers as a decline in oil prices amid demand outlook fears supported the index.

The Nifty opened lower at 18,430 to sink to the day’s low of 18,366 but immediately gained strength and rose to an all-time high of 18,614.25.

The index ended below 18,600 but still closed at a record high of 18,563, gaining 50 points over the previous day. It formed a bullish Engulfing candlestick on the daily charts, indicating a positive mood among market participants. It made higher highs for the fourth consecutive session.

The Nifty will likely march towards 18,700 and above, with initial support at around 18,400-18,350. Momentum indicators like MACD and RSI also suggested an uptrend on the daily as well as the weekly charts, experts said.

“Structurally, the index is forming an extension on the upside thus, the zone of 18,400-18,360 will continue to act as a crucial support area,” Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas said.

As long as the index stays above this zone, it can move upwards from a short-term perspective, he said. “Subsequent targets on the upside will be 18,700 & 19,000,” he said.

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The options data indicated that the index is likely to trade in the 18,300-18,800 range in the immediate term.

On the options front, the maximum Call open interest was at 19,000 strike followed by 20,000 strike with Call writing at 18,600 strike then 19,000.

On the Put side, the maximum Put open interest was at 18,000 strike followed by 17,000 strike, with Put writing at 18,600 strike then 18,500 strike.

The volatility index India VIX was up by 1.74 percent to 13.57 levels, which continues to support the market.

Banking index

The Bank Nifty opened negative at 42,757 but moved higher to hit the day’s high of 43,160. It moved in a consolidative manner in the second half and closed 36 points higher at 43,020.

The banking index formed a bullish candle on the daily frame but negated its higher highs-higher lows formation of the last four sessions.

The index has to hold above 42,750 to make an up move towards 43,250 and 43,339 levels, with supports at 42,750 and 42,500 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

The broader markets did better than the benchmark. The Nifty midcap 100 and smallcap 100 indices gained 0.7 percent and 1.2 percent on positive breadth.

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