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Technical View | Nifty forms bearish candle, 17,700 to be crucial support

As long as the Nifty sustains above the bullish gap zone of 17,791 and 17,703, any weakness should be seen as an opportunity to create fresh longs, Mazhar Mohammad of Chartviewindia said

April 05, 2022 / 05:03 PM IST

The Nifty snapped its three-day winning streak to close half a percent lower amid consolidation on April 5, which was expected after a 3.4 percent rally in the previous three sessions.

The Nifty opened higher at 18,081 and remained rangebound for most of the session before closing 96 points lower at 17,957.40.

It formed a bearish candle on the daily charts as the closing was lower than the opening levels. Consolidation would continue with 17,700 as crucial support, experts said, advising creating long positions on every dip till the index holds the support level.

“The Nifty50 appears to have slipped into a consolidation phase, after a steep rally from the lows of 17,422 to 18,114 levels, in just two trading sessions,” said Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.

Volatility inched up a bit but remained below the crucial 20 mark, a supporting factor for the market. India VIX, the fear index was up by 3.23 percent to 18.49 levels.

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"Volatility slightly moved up but overall lower volatility could attract the buying interest on declines," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

Also read: Taking Stock | Sensex falls 435 points, Nifty below 18,000 as HDFC twins drag

As long as the Nifty sustains above the bullish gap zone between 17,791 and 17,703 registered on the April 4, any weakness should be considered as an opportunity to create fresh longs, Mohammad said,

Weakness in the index will not be expected unless the Nifty closes below 17,700. Similarly, strength will not be expected unless the index closes above 18,115. Once the level is cleared, the rally can extend to 18,350 levels, Mohammad said.

Also read: Gainers & Losers: 10 stocks that moved the most on April 5

Traders with positional long positions on the index can place a stop-loss below 17,700, he said.

On the options front, maximum Call open interest remained at 18,000 strike followed by 19,000 strike, while maximum Put open interest also continued to be seen at 17,500 strike followed by 17,000 strike.

Marginal Call writing was seen at 18,000 strike then 18,200 strike, while Put writing was seen at 17,500 strike then 17,600 strike.

The data indicates that the Nifty could remain in an immediate trading of 17,700 to 18,350 levels.

The broader market continued its uptrend further with the Nifty midcap and smallcap indices rising 1.4 percent and 0.85 percent, respectively.

The banking index

Bank Nifty opened positive at 38,731 but failed to go past the previous day's high of 38,765 and came under pressure towards the end of the session. Some private banks witnessed profit booking as PSU banks held the index.

The index formed a bearish candle on the daily scale and closed 567 points lower at 38,068.

"Bank Nifty negated its higher highs of the last six sessions. The index has to hold above the 38,000-mark to see an up move towards 38,500 and 38,750 levels, whereas support can be seen at 37,777 and 37,500 levels," Taparia said.

On the stock front, he said positive setup was seen in Tata Power, Polycab India, Havells, Dixon Technologies, Aditya Birla Fashion & Retail, Adani Enterprises, Adani Ports, Voltas, SRF, United Breweries, Marico, NTPC, Trent, Indian Energy Exchange, Tata Consumer Products, City Union Bank, Power Grid Corporation of India, M&M Financial Services, United Spirits, DLF and Colgate Palmolive. Weakness was seen in Federal Bank, Kotak Mahindra Bank, Indian Hotels, Lupin and Infosys.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Apr 5, 2022 05:03 pm
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