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Technical View | Nifty forms bullish candle, uptrend can extend to 15,900

The index has to hold above 15,500 to extend the uptrend to 15,800-15,900, with crucial support at 15,400, say experts

June 21, 2022 / 05:22 PM IST

The Nifty closed almost two percent higher on June 21 in its best session in three weeks on positive global cues and buying in beaten-down sectors such as metals and information technology.

The index closed 288.65 points, or, 1.9 percent, higher at 15,638.80, decisively breaking the upper-end of resistance (15,600) and forming a bullish candle on the daily charts. Positive global cues and buying in beaten-down sectors lifted the mood at Dalal Street.

A bullish candle is formed when the closing is higher than the opening level. The index extended gains for the second consecutive session.

The recovery of more than two percent after a sharp sell-off is on expected lines and can be called a pullback rally, as the market was looking oversold and sentiment indicators also suggested recovery, experts said.

The index has to hold above 15,500 to extend the uptrend to 15,800-15,900, with crucial support at 15,400, they said.

Close

"The Nifty seems to have embarked on a pullback rally…however, strong selling pressure can be expected as the Nifty heads towards 15,900 levels," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

Also read: Sensex spikes over 900 points: Four factors behind the market rally

According to the market expert, further upside may be capped at around 15,863, the top of a Long Black day formation registered on June 16, with a trading range of 15,863 and 15,335 levels.

The lower end of the bearish gap zone of 15,886 and 16,172, registered on June 13, is not too far from the current levels. Hence, the upsides look capped between 15,850 –15,900 levels, he said.

On the downsides, the day’s bullish gap zone of 15,419 and 15,382 would act as support if this pullback has legs on the upside, Mazhar Mohammad said.

Sentiment indicator Stochastic showed a positive crossover and the relative strength index (RSI) some uptick, which suggests that sentiment is improving.

The healthy rally in broader space seems to be driven by value buying as well as short-covering. The Nifty midcap 100 and smallcap 100 gained around 3.5 percent each.

The volatility cooled down a bit more. India VIX, which measures the expected volatility in the market, fell 5.66 percent to 21.14 levels.

The options data indicates Nifty’s immediate trading range has shifted higher to 15,400-15,850 from 15,100-15,700.

On the option front, maximum Call open interest was seen at 16,000 strike followed by 16,500 strike, while maximum Put open interest was seen at 15,500 strike followed by 15,000 strike.

Call writing was seen at 15,900 strike then 15,600 strike, while Put writing was witnessed at 15,500 strike then 15,600 strike.

Banking index

The Bank Nifty opened 300 points higher at 32,978 and rose to the day's high of 33,600 in the first slip but slipped in the afternoon trade. After a bout of wild swings, it ended the day 507 points higher at 33,192.

The index formed a small-bodied bullish candle on the daily frame, with longer shadows indicating higher volatility.

It has to hold above 33,000 for a bounce towards 33,500 and 33,750, whereas on the downside, support can be seen at 32,750 and 32,500, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Among F&O stocks, positive setup was seen in in MCX, Titan Company, Mahanagar Gas, Bharat Forge, PVR, Coal India, DLF, Astral, JSW Steel, Max Financial Services, Jubilant Foodworks, Sun TV Network, Hindustan Aeronautics, HDFC AMC, Adani Enterprises, Lupin, Indraprastha Gas, Coromandel International, Syngene International, SBI, Indian Hotels Company, Voltas, Ashok Leyland, TCS, Dr Reddy's Laboratories, United Breweries, Infosys and ITC, Taparia said Weakness was seen in Page Industries and Marico.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Jun 21, 2022 05:22 pm
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