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Technical View: Nifty forms bearish candle; experts say avoid long side bets

Mazhar Mohammad of Chartviewindia.in advised traders to avoid long side bets. Intraday traders can short below 15,740 levels for a target towards 15,600 by placing a stop above intraday high.

June 16, 2021 / 04:42 PM IST

Nifty50 traded lower for the majority of the session on June 16 and finally settled with more than half a percent loss amid selling in metals, banking & financials, auto and pharma stocks.

The index formed a bearish candle on the daily charts as the closing was lower than opening levels. Experts feel the index can fall up to 15,600 if it breaks the crucial 15,742 mark in the coming sessions.

Mazhar Mohammad of Chartviewindia.in advised traders to avoid long side bets and intraday traders can short below 15,740 levels for a target towards 15,600, placing a stop above intraday high.

India VIX moved up by 1.82 percent from 14.60 to 14.86 levels but remained rangebound around 14-15 levels and supportive for bulls.

Nifty50 opened lower at 15,847.50 and attempted a bounce back to hit a day's high of 15,880.85, but immediately fell and traded lower for the rest of the session to hit an intraday low of 15,742.60. The index fell 101.80 points to close at 15,767.50.

Close

"Nifty50 appears to have triggered a corrective downswing as it registered a bearish candle after three consecutive indecisive formations. Hence, the next session is going to be critical for bulls as their failure to defend 15,742 levels shall drag down the index towards 15,600 levels, which as of now, appears to be the lower end of the broader consolidation zone placed between 16,000 – 15,600 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

According to him, if bears manage to break this support of 15,600 levels on a closing basis, a directional move on the downside shall occur.

Contrary to this, as markets are sloshed with liquidity flows and awaiting Federal Reserve outcome which is capable of influencing the market in the short term. If bulls manage to defend 15,742, the market may again make an attempt to rally towards 16,000 levels, he said.

On the options front, maximum Put open interest was seen at 15500 followed by 15000 strike while maximum Call open interest was seen at 16000 followed by 16500 strike. Minor Call writing was seen at 15800 then 15900 strike while minor Put writing was seen at 15600 then 15400 strike. Option data indicated that an immediate trading range for the Nifty could be 15,600 to 16,000 levels.

Bank Nifty opened lower at 35,196.25 and moved in a negative to rangebound manner throughout the day. It formed a bearish candle and closed 244.25 points lower at 35,003.50.

"Now Bank Nifty has to cross and hold above 35,000 levels to move towards 35,250 and 35,500 levels while on the downside support is seen at 34,750 and 34,500 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

On the stocks' front, a bullish setup was seen in Tata Power, HPCL, Tata Consumer Products, Nestle India, NTPC, Torrent Power, Dabur, HUL, Infosys and Mcdowell while weakness was seen in Adani Ports, Adani Enterprises, LIC Housing Finance, BHEL, Jindal Steel & Power, Voltas, IndiGo, Hindalco, Vedanta, JSW Steel, Canara Bank, Exide Industries, TVS Motor and Havells.
Sunil Shankar Matkar
first published: Jun 16, 2021 04:42 pm

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