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Last Updated : Nov 01, 2018 06:06 PM IST | Source:

Technical View: Nifty forms 'Bearish Belt Hold' pattern; look to buy above 10,450

Experts expect the consolidation to continue in coming sessions till the Nifty decisively breaks on either side.

Sunil Shankar Matkar

The market closed volatile session on flat note amid mixed quarterly earnings, with the Nifty consistently facing selling pressure near 10,450 levels on Thursday. Mixed Asian cues also caused volatility in the market.

The index made small bearish candle on daily charts, which resembles a 'Bearish Belt Hold' kind of pattern.

A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the trading day making up for the large body. The candle will either have a small or no upper shadow and small lower shadow.

Experts expect the consolidation to continue in coming sessions till the Nifty decisively breaks on either side.

The Nifty50 after opening sharply higher at 10,441.70, which was also the intraday high, traded in a tight range of 70 points throughout the session. It touched a day's low of 10,341.90, before closing 6.10 points lower at 10,380.50.

"In line with our projections profit booking appears to have kicked in around 10,450 levels as Nifty50 signed off the session with a 'Bearish Belt Hold' kind of formation. However, as advance decline ratio remained almost 2 to 1 this mild weakness can still be read as a consolidation move post bigger rally witnessed in Wednesday’s session," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

He said unless it closes above 10,450 levels momentum on the upside shall not pick-up further. On such a breakout next target for Nifty can be in the zone of 10,700 to 10,840 levels, he added.

According to him, if this rally really has strength and more upsides then on the downside buying should emerge in the zone of 10,277–10,233 levels.

For time being, he advised traders to adopt a neutral stance and look to buy on a fresh breakout above 10,450 levels or on reaching stability after correction.

India VIX fell by 2.90 percent to 19.22 levels.

Falling VIX from last two sessions suggests some bullish price setup but VIX has to go down below 17-16 zones to confirm the short term reversal and a decent bounce back after the sharp cut of last two months, Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On option front, maximum Put open interest (OI) was at 10,000 followed by 10,200 strikes while maximum Call OI was seen at 10,700 followed by 10,800 strikes.

Put writing was seen at 10,400 followed by 10,300 strike while Call writing was seen 10,400 followed by 10,700 strikes. Option band signifies a higher shift in trading band with immediate range of 10,300 to 10,600 zones.

"The Nifty index formed higher highs from last four consecutive sessions which indicates that buying interest is seen at lower levels," Taparia said.

He further said now the index has to continue to hold above 10,333 zones to extend its upmove towards 10,450-10,480 then 10,650 levels while on the downside multiple supports are seen at 10,250 then 10,180 levels.

Bank Nifty managed to hold above 25,000 zones and continued its positive momentum towards 25,400 zones. It formed a small bodied candle on daily scale which suggests that decline is bought and follow up is required at higher levels. It closed 170.40 points higher at 25,323.65.

Taparia said now the index has to continue to hold above 25,000 zones to extend its up towards its crucial hurdle of 25,500 and 25,650 levels while on the downside major support is seen at 24,750 zones.
First Published on Nov 1, 2018 05:23 pm
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