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Last Updated : Dec 12, 2019 05:18 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms bullish candle, a close above 13-day EMA points to positive trend ahead

Traders should make use of dips to create fresh longs with a stop below 11,920 on a closing basis and look for a target of 12,080, Mazhar Mohammad says.

Sunil Shankar Matkar

The Nifty remained positive throughout the session to close half a percent higher on December 12, thanks to a dovish commentary from the US Fed and ahead of the UK exit polls. Banks, auto and metals stocks led the market higher, though IT capped gains.

The index failed to hold on to the psychological mark of 12,000 touched intraday but closed above the 13-day exponential moving average (EMA), which indicates that the positive trend can continue in the coming sessions, say experts.

The index formed a bullish candle on daily charts as the closing was higher than the opening value.

Close

India VIX fell by 0.24 percent to 13.34 levels. Lower volatility could support the index to attract support- based buying interest with a rangebound bias.

After opening higher at 11,944.30, the Nifty50 gradually extended gains to hit an intraday high of 12,005.50. The index closed 61.60 points higher at 11,971.80, continuing the uptrend for the second straight session.

"Albeit intraday profit booking from the highs of 12,005 resulted in a slightly longer shadow, which is dominating the candle body, that itself can't be construed as a weak sign, as the Nifty closed above its near-term hurdle of 13-day exponential moving average (11,963) with a gap up on a favourable advance-decline ratio," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.

As long as the Nifty sustains above the gap present between 11,934–11,923, one can remain positively biased and look for an initial target of 12,031 and beyond that critical resistance for the short term will be present in the 12,081–12,092 zone.

But, a close below 11,923, shall be considered as an initial sign of weakness, Mohammad added.

For the time, traders should make use of dips to create fresh longs, with a stop below 11,920 on a closing basis and look for a target of 12,080, he said.

On the options front, maximum Put open interest was at 11,500 followed by 12,000 strike, while maximum Call open interest was at 12,000 followed by 12,200 strike.

The Nifty witnessed marginal Call writing in 12,000 strike; while decent writing was seen in 12,000 and 11,900 Put options. This options data suggests a wider trading range for the index between 11,700 and 12,100 for the coming weeks.

The Bank Nifty has negated the formation of lower highs - lower lows of e last four sessions and continued its positive stance towards 31,700. It formed a bullish belt hold candle on the daily scale and closed with gains of 408.70 points at 31,665.50.

"The banking index rebounded from its strong support of 31,000 levels and outperformed the benchmark indices. Till the time it sustains above its immediate support of 31,333, we maintain our positive stance for an upmove towards 32,000 – 32,200 levels in the coming days," Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.

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First Published on Dec 12, 2019 05:18 pm
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