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Feb 12, 2018 12:25 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms small bearish candle on weekly charts; 10,276 crucial for bulls

“Indian bourses remained vulnerable to the bouts of volatility emanating from global financial markets as one more day has gone down with a huge gap down before signing off the week with a small bearish candle formation on the charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

Kshitij Anand @kshanand

The Nifty50 which started with a gap down opening in Friday morning trade recouped some of the losses and closed significantly higher than the opening level making a bullish candle on the intraday charts. However, on weekly basis, Nifty formed a small bearish candle.

The index closed below its crucial support placed around 10,500 but above its crucial 100-days, exponential moving average (DEMA) placed at 10,400 levels.

The positive takeaway from this week is the fact that Indian market manages to close significantly higher than its opening level which suggests accumulation at lower levels.

The Nifty which opened at 10,416 slipped to an intraday low of 10,398. It bounced back after hitting 100-DMA to close 121 points lower at 10,454.

“Indian bourses remained vulnerable to the bouts of volatility emanating from global financial markets as one more day has gone down with a huge gap down before signing off the week with a small bearish candle formation on the charts,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“These kind of gap down openings are just suggesting fear on the part of traders but post such opening market is not witnessing follow through selloff atleast for that day. This has been the phenomena for almost three sessions which recently witnessed gap down openings. This kind of behaviour is only pointing towards some accumulation taking place at intraday low points,” he said.

Mohammad further added that for any reason if recent low of 10,276 is breached then correction may get extended up to 10,040 levels. Contrary to this a close above 10,637 shall be considered as an initial sign of strength in the market.

India VIX moved up by 8.55 percent at 19.29. Higher volatility could continue to keep volatile swings in the market with limited upside.

On the options front, maximum Put open interest was seen at 10,000 followed by 10,500 strikes while maximum Call OI was seen at 11,100 followed by 11,000 strikes.

Major Call writing was seen at all the strikes from 10,400 to 10,700 strikes while Put unwinding was seen at 10,500, 10,600 and 10,800 strikes. Fresh Put writing is also being witnessed at lower strikes like 10,400, 10,100 and 10,200.

“Option data suggests that trading range is slightly shifting lower and upside is restricted because of negative Global cues, Higher Volatility and fresh Call writing activities,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“The index is now near to major support at its rising trendline by connecting the swing lows of 9687, 10,033, 10,074 and 10,350 zones. The short-term trend is in pressure till it doesn’t cross and hold above 10,650 zones but if it manages to cross and hold above 10500 mark then a bounce back towards the hurdle of 10,600-10,650 zones cannot be ruled out,” he said.

Taparia further added that on the downside immediate support is seen at 10,400 and below that it may continue its decline towards 10,350 then recent swing low of 10,276 levels.

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