Technical View | Nifty forms Doji pattern, 18,700 is the level to watch

Market

The Nifty moved in a narrow 50-60 point range on June 26 to close 26 points higher at 18,691, as auto and pharma sectors emerging as the biggest of the day, rising a percent each.

The index has formed a Doji candlestick on the daily charts, indicating a tug-of-war between the bulls and the bears while taking support at 18,650.

It held on to the previous day's low as well as the 21-day exponential moving average at 18,636. If the index sustains at these levels, there is a possibility of an upward journey, experts said.

"On the lower end, it found support at the 21-day EMA on the daily timeframe. The trend remains complex as long as it stays within the bands of 18,500-18,800," Rupak De, senior technical analyst, LKP Securities, said.

A decisive breakout on either side can trigger a directional move, he said. Till then, he expects a market where dips would be bought and rises sold.

On the options front, the maximum Call open interest was at 18,800 strike followed by 19,000 strike, with meaningful Call writing at 18,700 strike, then 18,900 strike. The maximum put open interest was at 18,700 strike, followed by 18,600 and 18,800 strikes, with Put writing at 18,600 strike, then 18,700 strike.

The data indicates that the level of 18,700 is expected to be crucial, with support likely at 18,600 and the resistance at 18,800-18,900.

"The Nifty index is not selling off, nor it is able to break the all-time high mark. Today's candle closing for Nifty needs one more bullish candle for a Morning Star pattern to form on the Index. If that happens, then you can see the index breaking the all-time high," Rahul Ghose, Founder & CEO at Hedged said.

The open interest data for the Nifty and the Bank Nifty remains inconclusive and not showing signs of a one-sided movement. In such cases, trading the index through credit strategies is the more prudent thing to do, he said.

Bank Nifty

The Bank Nifty, which has the highest weight in the Nifty, opened marginally higher near 43,700 but consolidated in a narrow range of 200 points.

It closed 18 points higher at 43,641 and formed a small bearish candle on the daily scale.

Momentum is missing as selective banking stocks continue to underperform. "Now, the Bank Nifty has to continue to hold above 43,500 levels for a bounce towards 43,800 then 44,044 levels, whereas a hold below the same could see some weakness towards 43,333 and 43,250 levels," Chandan Taparia, Senior Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.

The broader markets turned strong after two days of lows as breadth was in favour of bulls. Nifty midcap 100 and smallcap 100 indices gained 0.92 percent and 0.62 percent.

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