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Technical View | Nifty forms Hammer pattern, directionless trade may continue

The index is expected to remain rangebound unless it decisively breaks 17,000-17,450 on the either side, say experts

March 28, 2022 / 04:48 PM IST

The Nifty again defended the crucial 17,000-mark as Indian shares smartly reversed losses of the morning session to close 0.4 percent higher on March 28.

The index formed a small bullish candle, which resembles hammer pattern, on the daily charts on March 28.

The hammer is a bullish reversal pattern formed after a decline. It consists of no upper shadow, a small body, and long lower shadow. The long lower shadow signifies that stocks bounced back after testing their support, where demand is located.

Banking & financials, FMCG stocks and Reliance Industries supported the market. The rally in European markets after reports of in-person talks between Ukraine and Russia and fall in oil prices lifted market sentiment.

The index is expected to remain range-bound unless it decisively breaks the range of 17,000-17,450 on either side, experts said. The index has been moving in this range for several days now.

Close

India VIX was down 3.50 percent to close at 22.61 levels, which also supported the bulls.

Also read: Gainers & Losers: Five stocks that moved the most on March 28

The Nifty opened moderately higher at 17,182 but squandered the gains to hit the day's low of 17,004. It, however, recouped these losses and gained more than 200 points from the day's low to hit an intraday high of 17,235 in the second half. Finally it settled at

17,222, up 69 points.

"The Nifty smartly recovered from intraday lows of 17,003 levels, after testing its 200-day SMA (simple moving average). Moreover, today's recovery from the lower end of the consolidation range confirmed that the index may remain sideways and directionless, till it registers a breakout from the zone of 17,450–17,000 levels," said Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia.

In the next couple of sessions, the bulls may attempt to push the index towards 17,400. "Strength shall be expected only on a close above 17,450 levels, whereas weakness shall resume on a close below 17,000 levels," he said.

For the time, intraday index traders can remain focussed on the long side for a target of 17,350–17,400, he said.

Also read: Gross margins will compress more as inflation delays normal, says Sanjeev Prasad of Kotak Equities

The options data also continued to indicate that the Nifty could trade in the 17,000-17,500 range in the coming sessions.

On the options front, maximum Call open interest was seen at 18,000 strike followed by 17,500 strike while maximum Put open interest was seen at 16,000 strike followed by 17,000 strike. Call writing was witnessed at 17,500 strike then 17,200 strike, while Put writing was seen at 17,000 strike then 17,200 strike.

Banking index

The Bank Nifty opened positive at 35,489 and while it remained under pressure initially, it witnessed a good uptick from support of 35,000 and headed towards 35,771 levels.

Buying interest was visible in heavyweight banking stocks, which helped the Bank Nifty post 300 points rally to close at 35,710.50.

The index formed a bullish candle on the daily scale with a longer lower shadow. "It has to hold above 35,500 levels to see an up move towards 36,000 and 36,250 levels, whereas support can be seen at 35,250 and 35,000," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

On the stock front, there was a positive setup in GAIL, Bank of Baroda, NMDC, Bharti Airtel, Coal India, Adani Enterprises, Indian Hotels Company, Aditya Birla Fashion and Retail, Axis Bank, ICICI Bank, Trent, JSW Steel, Power Grid Corporation, Hindalco and SBI. However, weakness was seen in Max Financial Services, BHEL, IDFC First Bank, HDFC AMC, Oracle Financial Services Software, Info Edge, Dr Lal PathLabs, Amara Raja Batteries, HPCL and Muthoot Finance, he added.

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.

Disclosure: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

 



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Sunil Shankar Matkar
first published: Mar 28, 2022 04:48 pm
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