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Technical View: Nifty forms large bullish candle, record high soon if index holds 11,800

Mazhar Mohammad advises traders to either create fresh longs on close above 11,800 levels or on dip into the zone of 11,740–11,720 levels.

October 29, 2019 / 05:39 PM IST

Representative image

The Nifty gained momentum after early trade volatility to hit a four-month high on October 29. Hope of divestment and more tax cuts lifted market sentiment, which was also aided by the possibility of a good festival season for auto companies and asset quality improvement at major banks.

The index gained more than 1 percent, though failed to hold 11,800 levels and formed a large bullish candle on the daily charts.

Once the index decisively closes above 11,800, the road is expected to clear for record high, experts says.

After opening higher at 11,643.95, the Nifty wiped out gains to hit day's low of 11,627.35 amid early trade, but immediately rebounded and gained strength as the day progressed. It hit an intraday high of 11,809.40 in afternoon and closed 159.70 points, or 1.37 percent higher, at 11,786.90, the highest level since July 5, 2019.


Finally, the Nifty50 appeared to have registered a strong breakout, with a robust bullish candle, as it decisively closed above its near-term hurdle placed around 11,700 levels, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, said. “However, in today's trading session, this counter appears to have faced some selling pressure as it neared its logical resistance of 11,810. Hence if the Nifty manages to consistently trade, on closing basis, above 11,800 levels for a couple of trading sessions, then decks will be cleared for it to retest recent life-time highs of 12,103," Mohammad said.

He said in between there could be a strong resistance at around 11,981.

Post this breakout, the trajectory of index changed into buy on dips mode and hence any correction into the zone of 11,740-11,720 could be an opportunity to create fresh longs and on the downsides, 11,627 would remain a critical support and a breach of this would weaken the current upswing, he added.

Mohammad advised traders to either create fresh longs on close above 11,800 or on dip into 11,740–11,720 zone.

India VIX moved up by 5.39 percent to 16.42 levels, while Option data suggests there is a shift in higher trading range of the Nifty to 11,600 to 12,000 levels.

Maximum Put open interest was seen at 11,700 followed by 11,600 strike, while maximum Call open interest was seen at 12,000 followed by 11,800 strike. Call writing was seen at 11,900 then 11800 strike, while meaningful Put writing was seen at 11700 then 11,750 strike.

The Bank Nifty continued its positive momentum and closed 1.2 percent higher at 29,873.05 and formed a bullish candle on the daily scale as it managed to surpass its crucial hurdle of 29,750 levels.

"Supports are gradually shifting higher and now need to hold above 29,700 levels to witness an upmove towards 30,000 then 30,250 levels, while on the downside supports are seen at 29,500 then 29,250 levels," Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services, said.

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Sunil Shankar Matkar
first published: Oct 29, 2019 04:55 pm
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