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Technical View: Nifty forms bullish candle

Yatheendradas C.k. at 08:38 PM - Nov 27, 2018 ( ) Views: 140

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Last Updated : Nov 27, 2018 06:15 PM IST | Source: Moneycontrol.com
Technical View: Nifty forms bullish candle, needs to surpass 200-DMA for strong rally
India VIX fell sharply by 10.94 percent to 18.17 levels. Sudden fall in VIX might provide short term stability in the market.
Sunil Shankar Matkar

The market continued its run for second day in a row on Tuesday, with the Nifty moving closer to 10,700 levels backed by index heavyweights Reliance Industries, HDFC Bank, HDFC, Infosys and TCS.

The 50-share NSE Nifty formed bullish candle on the daily charts but the market breadth remained in favour of bears, which is a concern, experts said.

The index opened flat and fell slightly below 10,600 levels amid volatility, but managed to move upwards in afternoon and extended rally in late trade to hit an intraday high of 10,695.15.

 
As a result the index is now comfortably above its crucial short term moving averages. It closed 57 points higher at 10,685.60.

 
"Bulls appears to be dragging their feet on the upside as they signed off the choppy session with a bullish candle on the back of strength from IT and PSU banking space," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

 

He said despite this bullishness for second day in a row advance:decline ratio still remains a concern as it is still favouring bears for second day in a row. "Hence, unless bulls manages a fresh breakout above its 200-Day Moving Averages, which is also placed around its recent swing high of 10,774 levels, a sustainable upmove shall not be expected in the indices."

On the National Stock Exchange, 921 shares declined against 792 advancing shares.

According to Mazhar, in case if Nifty50 manages a breakout above 10,774 levels then a higher target towards 11,069 can be expected.

However, in between 10,840 shall remain a critical hurdle whereas on the downside a close below 10,489 shall trigger fresh leg of downswing, he said.

On the options front, maximum Call open interest (OI) was seen at the 11,000 strike, followed by 10,700 and 10,800 strikes while maximum Put open interest was seen at the 10,500 strike, followed by 10,600 and 10,400 strikes.

Meaningful Put writing was seen at 10,600 followed by 10,650 strike whereas Call unwinding was seen at all the immediate strikes with minor Call writing at 10,750 strike.

The upside seen for second consecutive day indicated that the minor degree correction, which the index witnessed in the last week, looks done at the recent low of 10,489.

"In terms of the wave structure, wave b seems to be over at 10,489 & wave c of the pullback has been kicked off on the upside. Once the Nifty takes out the swing high of 10,774 then the index can march towards 11,000-11,140 in the short term," Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas said.

Thus traders are recommended to position themselves on the long side of the trade & they can increase their exposure on the buy side once the Nifty crosses 10,774, he advised.

India VIX fell sharply by 10.94 percent to 18.17 levels. Sudden fall in VIX might provide short term stability in the market.

Bank Nifty opened negative but witnessed buying at lower levels to settle in positive territory. It formed a bullish candle on daily scale and gave consolidation break out of 26,000-26,350 range. It closed 77.50 points higher at 26,443.10.

"Now till it holds above 26,250 it can extend its gains towards 26,650 and then 26,750 while on the down side supports is seen at 26,333-26,250 zones," Chandan Taparia, Associate Vice President | Analyst-Derivatives, Motilal Oswal Financial Services said.


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