Technical View | Nifty forms bearish candle, range-bound trade likely

Market

The Nifty ended lower for the second day on April 18 on selling in some index heavyweights but buying in technology, pharma and banks cushioned the losses.

After opening higher at 17,766.60, also the day’s high, it squandered the gains in the first hour itself and traded lower for the rest of the session. It dropped to the day’s low of 17,610 but recovered some of the losses to close 47 points down at 17,660.

The index traded within the range of the previous session and formed a bearish candlestick on the daily charts.

The Nifty managed to defend 17,600 on both days, which can act as support, followed by 17,500, while 17,700-17,850 is expected to be resistance. If the index goes past it, it can hit 18,000, experts said.

"Technically we observe overlapping negative candles at the hurdle and the market is sustaining above the immediate support of 17,600 levels. The formation of such overlapping candles and lower shadows indicate intent of bulls to make a comeback in the market," Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.

The short term trend remains choppy and the medium uptrend status is intact.

Consolidation is likely for another one or two sessions before the index resumes its upside momentum. Immediate support is at 17,600-17,500, he said.

The maximum Call open interest was at 17,700 strike, followed by 17,800 and 18,000 strikes, which can act as crucial resistance levels for the Nifty, with meaningful Call writing at similar strikes.

On the Put side, the maximum open interest was at 17,500 strike, which can be crucial support, followed by 17,700 strike and 17,600 strikes, with writing at 17,400 and 17,500 strikes.

The data indicates that the Nifty will likely trade in the 17,400-18,000 range in the coming sessions.

Banking index

The Bank Nifty opened on a positive note at 42,407 but moved in a narrow range to close 2.6 points higher at 42,265. It formed a bearish candlestick or Inside Bar pattern on the daily scale, as it traded within the range of the previous day.

The index has to hold above 42,000 to make an up move towards 42,600, then 42,750. On the downside, supports are at 41,750 and 41,600, said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

India VIX, which measures the expected volatility in the market, cooled down to 12.08, falling 1.54 percent from 12.27.

The broader market performed better than the benchmarks for another day. Nifty midcap 100 and smallcap 100 indices gained 0.8 percent and 0.3 percent.

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