Last Updated : Dec 18, 2018 05:51 PM IST | Source:

Technical View: Nifty forms bullish candle, ends higher for 6th day; next target seen at 10,950

Mazhar advised traders, for time being, to take profits and refrain from creating fresh longs till Nifty dips towards its support points.

Sunil Shankar Matkar

The Nifty50 started off the session on negative note following correction in global peers on growth concern, but managed to rebound in last hour of trade to close above 10,900 levels. The sharp fall in oil prices which resulted into rupee appreciation boosted market sentiment on Tuesday.

The index continued its uptrend for sixth consecutive session and formed bullish candle on the daily scale. The BSE Sensex recovered 300 points from day's low to end at 36,347.08, up 77.01 points.

The market seems to be in a overbought zone after six-day gains, so there could be some profit booking in coming sessions, experts said.

The Nifty50 opened lower at 10,850.90 and touched an intraday low of 10,819.10 in morning itself, but the recovery which started in afternoon helped it rebound in last hour and close above 10,900 levels. The index was up 20.30 points at 10,908.70.

"Bulls are moving ahead with confidence as Nifty50 smartly recovered in the latter half of the session before signing off the day with a decent bull candle. Interestingly, initial dip into Monday's bullish gap zone of 10,844–10,815 is bought into by the market participants," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

He said as the current rally is into its 6th session with consecutive positive closes it has reached overbought levels and hence it may not stretch further on the upsides beyond a point without a pause. "Hence, this can be the right opportunity for the bulls to take profits in the next session if Nifty opens around 10,950 kind of levels."

He further said while upsides from current levels look capped between 10,950–11,069 zone on the down sides initial support is placed around 10,800 levels where as a close below its 200-day moving average (10,761) shall trigger short term reversal.

Mazhar advised traders, for time being, to take profits and refrain from creating fresh longs till Nifty dips towards its support points.

India VIX remained flattish and closed with marginal gains of 0.26 percent at 14.57 levels. Overall volatility fell down sharply from higher levels in last six trading sessions with surge in Put Call Ratio which suggests bulls grip in the market.

On the option front, maximum Put open interest (OI) was seen at 10,000 followed by 10,800 strikes while maximum Call OI was at 11,000 followed by 10,900 strikes.

Fresh put writing was seen at 10,900 followed by 10,800 strikes while Call writing was intact at 10,900 followed by 11,100 strike. Option band signifies a trading range in between 10,750 to 11,000 zones.

"Nifty index has been shifting its support to higher zones and given a highest daily close in last 52 trading sessions since October 1, 2018. Now it has to continue to hold above 10,800 zones to extend its move towards 11,000 then 11,176 zones, while on the downside support exists at 10,777 then 10,700 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited said.

Bank Nifty managed to respect its support of 26,850 zones and witnessed buying at latter part of the session towards 27,200 zones.

The index formed a bullish candle on daily scale by surpassing immediate hurdle of 27,000 zones which suggests that momentum could extend to higher zones, Chandan Taparia said.

Now it has to continue to hold above 26,850 zones to extend its gains towards 27,500 zones while on the downside support is seen at 26,666 levels, he added.
First Published on Dec 18, 2018 04:30 pm
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