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Sep 12, 2017 05:35 PM IST | Source:

Technical View: Nifty forms bullish candle; on track to hit fresh record highs soon

Traders are advised to stay long as long as Nifty trades above its crucial psychological level of 10,000 with a strict stop loss below 9,960 levels.

Kshitij Anand @kshanand

The Nifty50 which opened with a gap on the higher side recorded another breakout above its 15-days old ascending channel and made a bullish candle on the daily candlestick charts on Tuesday.

The index closed near its crucial resistance level of 10,100 and is on track to hit fresh record highs in coming sessions. If Nifty breaks above its previous record high of 10,137 then a further rally of up to 4 percent could be on cards, suggest experts.

“In the short term we are sure that trend is positive since the base formation at 9,900-9,800 looks good for a rally of 3-4 percent on upside once 10,140 is taken out,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.

The Supertrend indicator, a trend following indicator, gave a buy or an uptrend signal on the daily charts on Nifty after the intraday price movement broke above the trend line.

The last time Supertrend indicator gave a sell signal which was on 10 August, Nifty lost about 200 points to hit its recent low of around 9,680. Before that, it gave a buy signal back in December 2016. The rally took the index from 8,000 to its record high of 10,137.

MACD or Moving average convergence divergence indicator gave a buy signal on 1 September 2017 when index broke above 9,950 but then geopolitical tensions capped the upside.

But, now with most of the worries out of the bay, the stage is set for the index to touch fresh highs, suggest experts.

The Nifty50 opened at 10,056.85 and rose to an intraday high of 10,097.55 before closing the day at 10,093, up 87 points. It slipped to hit its intraday low of 10,056 which resulted in slightly long lower shadow.


Traders are advised to stay long as long as Nifty trades above its crucial psychological level of 10,000 with a strict stop loss below 9,960 levels.

“After today’s breakout above the 15-day old ascending channel on lower time frame charts it appears that decks are cleared for new life time highs once again with a retest of 10,137 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“This breakout has thrown up a new near term target placed around 10,205. Hence, as long as Nifty sustains above 10,000 level on closing basis trade should be on the long side, till some signs of weakness are visible,” he said. Traders are advised to keep a stop of 9,960 levels and shop for stock specific opportunities.

On the options front, maximum Put OI was seen at strike prices 9,900 followed by 9,700 and 9,800 while maximum Call OI is shifting from 10,000 to 10,200 strikes which is a bullish sign.

Fresh Put writing at 10,100 and 10,000 strikes which indicate that Put writers are keeping the tight grip on the market while the shift in maximum Call OI is giving the scope to head towards 10200 zones.

“Option data suggests a shift of the support to psychological 10,000 zones while now on the upside it is all set to hit the new life time high territory. India VIX fell down by 4.87 percent at 11.75 and a decline in VIX below 12.50 has given a fresh hope for a new rally to the market,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It formed a Bullish Candle on the daily chart and it is just a few points away from its life time high of 10,138 marks. Now, the index has to continue to hold above 10,050 to extend its move towards 10,138 and then towards 10,200 zones while on the downside supports are seen at 9,980 and then towards 9,928 levels,” he said.
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