Moneycontrol Be a Pro
Get App
Last Updated : Jul 04, 2019 05:25 PM IST | Source: Moneycontrol.com

Technical View: Nifty forms bullish candle, may retest record high on Budget day

Similarly, if Budget induces a positive dose among investors, then a retest of lifetime highs present around 12,100 is possible

Sunil Shankar Matkar

Nifty after consolidation closed higher for fourth consecutive session on July 4 as traders remained cautiously optimistic ahead of Union Budget 2019 scheduled to be presented in parliament on July 5. Buying was seen in sectors like PSU banks, irrigation, FMCG, sugar and select fertiliser stocks on optimism ahead of Budget.

The index decisively held 11,900 and gradually marched towards 12,000, forming bullish candle on daily charts.

Close

Nifty after opening higher at 11,928.80 remained positive throughout the session. It hit an intraday high of 11,969.25 and low of 11,923.65, before closing 30 points higher at 11,946.80.

"Despite the positive close for the fourth consecutive session with a small bullish candle price action for the day remained extremely narrow with 46 points. In fact, bulls appear to be reluctantly dragging their feet on the upside in a laborious manner with extremely narrow ranges," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

He said any negative reaction owing to Budget, Nifty may wipe out 4-day gains with a single punch. "In terms of levels, especially for an event-driven day, traders are advised to look out for support in the zone of 11,775–11,723, breach of which on closing basis shall embolden bears to dominate in subsequent sessions."

Similarly, if Budget induces a positive dose among investors, then a retest of lifetime highs present around 12,100 is possible, he said.

For Nifty options, maximum Call open interest (OI) was at 12,000 strike, followed by 12,500 and 12,400 strikes while maximum Put OI was at 11,500 followed by 11,000 and 11,800 strikes.

We have seen significant Put writing at 11,900 followed by 11,800 and 11,700 strikes while Call writing was seen at 12,100 followed by 12,500 and 12,000 strikes.

"Since Nifty is trading closer to its crucial hurdle of 12,000, we suggest being extra cautious in long trades. Also, we advise keeping leveraged positions hedged before the event. In case of decline, 11,800 would act as strong cushion," Jayant Manglik, President - Retail Distribution at Religare Broking said.

India VIX fell 1.24 percent to 13.53.

Bank Nifty managed to surpass its consolidation band of 31,000 to 31,500 zones but failed to hold at higher levels and settled at 31,470.

The index closed 89.55 points higher at 31,471.85 and formed a Doji candle on the daily scale near its life-time high territory that implies that follow up is missing at higher levels, experts said.

"Now, it has to continue to hold above 31,313 to extend its gains towards 31,500 then 31,780 while on the downside supports are seen at 31,150 then 31,000," Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services told Moneycontrol.

The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .
First Published on Jul 4, 2019 05:21 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant