After opening in the negative, Nifty50 gained strength in late morning deals and gradually extended by more than 100 points on April 22. The index formed a bullish candle on the daily charts, as the closing was higher than opening levels. The pattern resembles a bullish Piercing Line kind of pattern. Experts feel with today's strength, the index can cross 14,500 levels in coming sessions.
The piercing pattern is a bullish trend reversal or bottom reversal pattern that appears towards the end of a downtrend. It opened with a gap down and went on to close above the midpoint of the preceding session. It is an early sign that the bulls are in charge and decline is being bought.
For the time being, Mazhar Mohammad of Chartviewindia advised traders to wait for more consolidation before going long and should refrain from shorting unless Nifty closes below 14,300 levels.
Nifty50 opened lower at 14,219.15 and hit a day's low of 14,151.40, but gained strength in late morning deals and gradually climbed further to hit an intraday high of 14,424.75 in late trade. The index rose 109.80 points to close at 14,406.20.
"Nifty50 appears to have taken support on its 100-day exponential moving average placed around 14,169, as it sharply recoiled from intraday low of 14,151 levels. In this process, it seems to have registered a Piercing line kind of reversal formation, though in a perfect piercing line pattern, the index needs a close above the mid-point of preceding session's candle body (14,411)," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
Moreover, today's close is above the 100-day simple moving average (14,361) which offered support to the index in the last couple of trading sessions on a closing basis, he said. Hence, there can be some strength in this recovery and the pullback can initially expand towards 14,526 levels and beyond that, 14,650 can't be ruled out.
India VIX rose by 2.70 percent from 22.42 to 23.02 levels, which could be a concern for any upside. The index needs to trade below 20 mark to again attract a bullish stance in the market, Chandan Taparia of Motilal Oswal said.
On option front, maximum Put open interest was seen at 14,000 followed by 13,500 strike while maximum Call open interest was seen at 15,000 followed by 14,500 strike. Call writing was seen at 14,800 then 15,000 strike while Put writing was seen at 14,000 and 14,200 strike.
Option data indicated that the Nifty could see a wider trading range of 14,000 to 14,700 levels in coming sessions.
Bank Nifty opened gap down at 30,763.50 but managed to hold multiple support of 30,500 levels and escalated above the previous day's high to hit an intraday high of 31,834.50. Banking stocks outperformed the broader markets and the index closed with gains of 669.90 points or 2.15 percent at 31,782.60.
The index formed a Bullish Engulfing candle on the daily scale and managed to regain losing ground of the last session.
"Bank Nifty needs to continue to trade above 31,750 for an up move towards 32,250 and 32,500, while on the downside support can be seen at 31,250 and 31,000 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
On stocks front, bullish setup was seen in SAIL, Motherson Sumi Systems, Wipro, ICICI Bank, Cummins India, Tata Steel, ICICI Prudential, JSW Steel, NMDC, Cholamandalam Investment, Bajaj Auto, Jindal Steel, Jubilant Foodworks and Adani Enterprises while weakness was seen in Escorts, Godrej Consumer Products, Titan, Sun TV Network, UltraTech Cement, Tech Mahindra, MRF and TCS, he added.