Technical View: Nifty forms bullish candle for 2nd consecutive day, next target seen at 11,080

The Nifty50 after flat opening gradually extended rally and went closer to 11,000 levels in late trade on Tuesday after a long weekend. The optimism in pre-election rally after ease in geopolitical tensions, and consistent buying interest in midcaps & smallcaps lifted investors' sentiment.

The index formed a strong bullish candle on daily scale by surpassing immediate hurdle of 10,888 and 10,929 level and gave the highest daily close in last 17 trading sessions.

If the index decisively closes above 11,000 then the next target could be 11,080, experts said, adding the immediate support exists at 10,888.

The Nifty50 opened flat at 10,864.85 and immediately slipped into the red to hit a day's low of 10,817, but managed to claw back in first hour of trade itself and gradually extended rally to touch an intraday high of 10,994.90. The index closed 124 points or 1.14 percent higher at 10,987.50.

"Nifty50 appeas to have registered a fresh breakout, on short term charts, post minor consolidation phase which lasted for couple of sessions as it smartly recoiled from intraday low of 10,817 before signing off the day with a strong bullish candle," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said though initial hurdle appears to be placed around 11,118 kinds of levels, on a decisive breakout above the said resistance point shall pave the way for much bigger rally with targets placed around 11,400 levels.

Hence, he advised traders to remain positively biased as long as Nifty sustains above 10,817 levels and look to ride this current rally beyond 11,118 kinds of levels.

This bullish outlook shall get negated if Nifty closes below 10,817 kinds of levels, Mazhar said.

India VIX fell by 3.76 percent to 15.65 levels. Now, VIX needs to continue to hold below 16-15 zones to get the smooth ride in the market.

On option front, maximum Put open interest (OI) is at 10,700 followed by 10,600 strike while maximum Call OI is at 11,500 followed by 11,000 strike.

Call writing is at 11,500 followed by 11,100 strike while Put writing is at 10,900 followed by 11,000 strike.

Option band signifies a trading range in between 10,777 to 11,118 zones, experts said.

"The Nifty index managed to give a consolidation breakout with strong momentum which indicates that bulls are back on track," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.

He said now the index has to continue to hold above 10,929 zone to extend its move towards 11,080 then 11,118 zones while on the downside support exists at 10,888 then 10,850 zone.

Bank Nifty finally surpassed its immediate hurdle of 27,200-27,250 zones and extended its gains towards 27,580 levels.

The index closed 510.15 points higher at 27,554.05 and formed a big bullish candle on daily scale which suggests that bulls are holding tight grip.

"Now it has to continue to hold above 27,350 to witness an upmove towards 27,750 then 28,000 zones while on the downside support exists at 27,350 then 27,150 zones," Chandan said.