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Technical View: Nifty forms bullish candle, 13,772 key level for an up move

Traders should focus on stock-specific opportunities, Mazhar Mohammad of Chartviewindia.in has said.

December 23, 2020 / 04:41 PM IST

The Nifty50 continued to recover the losses suffered two days ago on buying across sectors and closed a percent higher for a second consecutive day on December 23 despite a mixed global trend amid concerns over the new coronavirus strain and lockdown in the UK.

After opening higher at 13,473.50, the Nifty remained strong through the session as it gradually extended uptrend to hit the day's high of 13,619.45 in the afternoon. The index settled at 13,601.10, up 134.80 points.

It formed a bullish candle on the daily charts as the closing was higher than the opening levels.

Experts expect the rangebound trade to continue in the coming sessions till the index decisively breaks its previous record high levels. Traders should shift their focus on stock-specific opportunities, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

India VIX also declined for the second consecutive session, aiding the bulls. India VIX was down by 6.76 percent from 21.98 to 20.49 levels.

Close

The Nifty's price action was similar to the one witnessed in August, October and November, when the index registered a bigger single-day fall, similar to the one registered on December 21, which failed to alter the existing trend and eventually managed to resume the uptrend, Mohammad said. "Hence, as long as the Nifty sustains above the last Monday's low of 13,131 levels, the index shall trade sideways with a positive bias," Mohammad said.

If the bulls manage to keep the index above 13,643 for two trading sessions on a closing basis then a retest of recent life-time highs present at around 13,772 can't be ruled out, Mohammad said.

In the next session, the Nifty needs to sustain above 13,432 to retain the bullish bias, he said. If it slips below 13,432, then some selling pressure can be expected and a 13,600 –13,200 trading range may emerge for a couple of sessions, he said.

On the options front, maximum Put open interest was seen at 13,000 followed by 13,500 strike, while maximum Call open interest was at 14,000 followed by 13,500 strike. Marginal Call writing was seen at 14,000 then 13,600 strike, while Put writing was seen at 13,500 then 13,400 strike.

The data indicates that the Nifty could see an immediate trading range of 13,200-13,750.

The Bank Nifty opened higher at 29,560.75 and turned volatile in initial trade to hit the day's low of 29,446 but immediately gained momentum to touch an intraday high of 29,941.40.

All the banking counters witnessed strength and the index settled at 29,883.30, up 257.30 points. The index formed a bullish candlestick on the daily scale after making a Dragon Fly Doji in the previous session.

"Now it has to continue to hold above 29,500 to witness an upmove towards 30,200 and 30,500, while on the downside, support is seen at 29,500 and 29,200 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Positive setup was seen in Vedanta, Max Financial Services, Wipro, Tata Consumer Products, Mindtree, Biocon, Cholamandalam Investment, Cipla, Tata Steel, Berger Paints, Voltas, Infosys, SRF, HUL, Grasim, Asian Paints and Havells while weakness was seen in PNB and HPCL, he added.
Sunil Shankar Matkar
first published: Dec 23, 2020 04:37 pm

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