Last Updated : Jul 13, 2018 06:00 PM IST | Source:

Technical View: Nifty forms a bearish candle but small pause unlikely to hurt bulls

The index closed 4.30 points lower at 11,018.90 today while on the weekly basis, it rallied 2.3 percent.

Moneycontrol News @moneycontrolcom

The Nifty50 started off the last day on a positive note following positive global cues but immediately wiped out those gains to trade volatile for rest of the day and closed mildly in the red on Friday. Investors await another batch of earnings reports.

The index formed a bearish candle on the daily charts and a decent bullish candle on the weekly scale.

Flat close with a negative bias indicated that the market took a breather after rallying sharply in the previous session, but managed to hold the psychological 11,000-mark for the second consecutive session which hinted that bulls have not given up yet and may help the index hit earlier record high of 11,171 seen in January, experts said.

The 50-share NSE Nifty after opening at 11,056.90 extended gains to hit an intraday high of 11,071.35, but wiped out those gains in the morning trade itself to hit day's low of 10,999.75. It traded in a range of about 30 points for rest of the day but did not break previous day's intraday low of 10,999.65.

The index closed 4.30 points lower at 11,018.90 today while on the weekly basis, it rallied 2.3 percent.

"Market appears to be in a consolidation mode as Nifty50 respected the bullish gap zone, between 10,999–10,976, registered on Thursday’s trading session as it signed off the last day of the week with a bearish candle above the psychologically important 11,000 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

However, on weekly charts a decent bullish candle with a full-fledged breakout above the 8 week consolidation zone is clearly visible, he said. "Hence, this pause shall eventually pave the way for a fresh breakout which shall initially lead to the test of life time highs present around 11,171 levels."

Hence, positional traders are advised to buy the dips and retain positive stance as long as Nifty50 sustains above 10,900 levels on closing basis and look for bigger targets over a period of time, he said.

India VIX fell 1.62 percent at 12.30 levels.

On the option front, maximum Put open interest (OI)P was at 10,600 followed by 10,700 strike while maximum Call OI was at 11,000 followed by 11,200 strike.

Significant Put writing was seen at 11,000 and 10,900 strikes while Call writing was seen at 11,200 strike. Option band signifies an immediate trading range in between 10,929 to 11,171 zones, experts said.

"Nifty index opened positive but failed to surpass its previous day high and remained range bound for most part of trading session. It formed a Bearish Candle on daily scale however managed to settle above its psychological 11,000 mark for second consecutive session," Chandan Taparia, Associate Vice President | Analyst-Derivatives, Motilal Oswal Securities told Moneycontrol.

Now it has to continue to hold above 10,975 zones to extend its gain towards 11,080 then life time high of 11,171 zones while on the downside supports are seen at 10,929 then 10,888 zones, he said.
First Published on Jul 13, 2018 06:00 pm
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