Technical View: Nifty forms bullish candle amid afternoon recovery, 10,813 crucial for bulls

Technical View: Nifty forms bullish candle amid afternoon recovery, 10,813 crucial for bulls



The Nifty50 rebounded in afternoon trade after hitting Budget day’s low of 10,813 and closed marginally higher on Monday. Positive Asian cues and the upside in Reliance Industries & HDFC group stocks helped the market close in the green.

The index ended above 10,900 levels and formed bullish candle on the daily charts.

The 10,813 level is crucial for bulls as it tested again on Monday after Budget session, experts said, adding if it manages to hold the same in coming sessions, then the index could make an attempt to move near 11,000 level.

The Nifty50 after opening lower at 10,876.75 hit an intraday low of 10,814.15 amid volatility, but managed to rebound in last hour of trade and touched a day’s high of 10,927.90. The index closed 18.60 points higher at 10,912.30.

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“Nifty50 registered a smart recovery in latter half of the session after almost testing Budget day’s low of 10,813 which resulted in a bullish candle with a slightly longer lower shadow. This price behaviour can still be read as a consolidation move rather than ‘Hanging Man’ formation which suggest exhaustion of short term uptrend as current rally is hardly 3-day old,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

He said as long as it sustains above 10,813 one can retain positive stance on the indices but a major sustainable move should be expected only on a close above 10,987 levels.

“On such a breakout above 10,987 levels a target of 11,350 can be expected. However, breach of 10,813 on closing basis shall resume the downtrend towards lower end of the consolidation range placed between 10,987–10,530 kind of levels,” Mazhar added.

He said as some beaten down stocks are showing signs of stability and bottoming out, he advised traders to focus on such stock specific opportunities.

India VIX remained flattish with the gains of 0.02 percent at 15.72 levels.

Experts said VIX needs to hold below 16 zones to get a decisive range breakout above 10,985 zones.

On option front, maximum Put open interest (OI) is at 10,700 followed by 10,500 and 10,400 strike while maximum Call OI is at 11,000 followed by 11,200 strike.

Fresh Call writing is at 11,000 followed by 11,100 strike while Put writing is at 10,800 followed by 10,900 strikes.

Option band signifies a trading range in between 10,700 to 11,000-11,200 zones, experts said.

“Nifty index had managed to hold previous day’s low and formed an Inside Bar on daily scale as it traded in the trading range of the last session. It managed to continue its formation of higher lows for fourth consecutive session,” Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Now it has to continue to hold above 10,820 zones to extend its move towards 10,985 then a fresh leg of rally towards 11,080 then 11,176 zones while on the downside support exists at 10,777 zones, he added.

Bank Nifty slipped towards 26,800 zones but recovered sharply from lower zones in latter part of the session and managed to close above 27,150 level. It closed at 27,186.60, up 100.65 points and formed a bullish candle on daily scale as buying interest is visible at lower levels.

“Now it has to hold above 27,150 zones to witness an upmove towards 27,350 then 27,500 zones while on the downside support exists at 26,850 then 26,666 zones,” Chandan said.

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