Moneycontrol
Last Updated : Jun 02, 2020 06:27 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms bullish candle, creates intraday long positions above 10,040

Experts expect the momentum to continue in coming days if the index holds on to 9,824.

Sunil Shankar Matkar

The Nifty50, after witnessing volatility initially, gained momentum and sustained it throughout the session to close near 10,000 on June 2, following gradual opening up of economy and government's commitment towards more reforms to strengthen the economy.

The market shrugged off Moody's credit rating downgrade news.

Close

The index continued its uptrend for fifth consecutive session and formed bullish candle on daily charts as closing was higher than opening levels.

Experts expect the momentum to continue in coming days if the index holds on to 9,824.

Mazhar Mohammad of Chartviewindia.in advised traders to remain neutral but intraday long positions can be considered above 10,040 for a target close to 10,159 with a stop below intraday low.

The Nifty50 witnessed gap up opening at 9,880.85 and turned volatile to hit an intraday low of 9,824.05 in an initial hour of trade, but immediately gained the momentum and extended gains to hit a day's high of 9,995.60 in late trade. The index settled at 9,979.10, up 152.95 points or 1.56 percent.

"Albeit Nifty50 continued its upward momentum trading range remained somewhat narrower with 160 points which can be a cause for concern going forward. As this kind of behaviour is occurring not only in overbought zone on lower time frame charts but also around 50 percent retracement value of its entire fall from the highs of 12,430 – 7,511, which is around 9,970 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said moreover 100-day exponential moving average, which is placed at 10,037, is almost flat with similar values for last three trading sessions. Hence, in next trading session if Nifty fails to sustain above 9,824 levels then it may induce some intraday selling pressure towards its initial support of 9,700 levels, he added.

In case if bulls fail to defend 9,700 on closing basis then correction shall get extended further towards 9,500 levels, he said, adding contrary to this a strong close above 10,040 shall expand the upswing towards 10,159 levels

Option data suggests a wider trading range for the Nifty at 9,500 to 10,200 levels.

On monthly options front, maximum Put open interest was at 9,000 followed by 9,500 strike, while maximum Call open interest was at 10,000 followed by 10,500 strike.

Marginal Call writing was seen in 11,000 followed by 10,600 strike while Put writing was seen at 9,500 followed 9,900 strike.

India VIX fell by 2.05 percent to 30.11 levels.

The broader markets also participated in the run with the Nifty Midcap index rising over a percent and Smallcap index gaining over 2 percent.

On the sectoral front, all indices barring FMCG closed in the green with Realty rising the most, up 5 percent.

Bank Nifty continued to trade higher for sixth consecutive session and surged nearly 19 percent from May 24th closing.

Today the index opened at 20,120.60 and showed same kind of behaviour like Nifty50. The index stayed above 20,000 mark and hit an intraday high of 20,615.75, before closing 570.30 points or 2.86 percent higher at 20,530.20.

The index formed bullish candle on daily charts.

"We also witnessed positive crossover of 5 DEMA and 20 DEMA along with higher high – higher lows formation which has bullish implication. At current juncture, RSI oscillator is moving northward on both daily and weekly chart and thus showing strength in the index," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.

"Considering overall chart structure, we may see further bounce in Bank Nifty towards 21,300 and then 22,000 mark, while supports are inching higher to 20,000 and 19,600 levels," he said.
First Published on Jun 2, 2020 05:17 pm
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