Technical View | Nifty forms bullish candle, 17,400 vital for index to gain strength

The Nifty started September on a negative note as it reversed the previous day’s gains to close 1.2 percent lower at 17,543 on weak global cues and interest rate hike worries.

As the index recovered from the day’s low, it formed a small-bodied bullish candle on the daily charts. The gap-up range of the previous day (around 17,400) is expected to act as a crucial support and needs to be protected on a closing basis for the index to gain strength, experts said.

“… the entire price range of the day is confined to Tuesday’s range present between 17,777 and 17,401 levels. Therefore, for the time market may ideally consolidate inside the said range,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

The index will have to protect the bullish gap zone of 17,401 and 17,380 of August 30, as a breach of 17,380 on a closing basis can trigger weakness and the index can slip to the recent low of 17,166.

Considering the strong moves of the last two trading sessions, traders can remain neutral on the index, Mohammad said.

Also read: Taking Stock | Indian market succumbs to negative global cues, slides more than 1%

The broader markets continued to outperform the frontliners. The Nifty midcap 100 and smallcap 100 indices gained 0.1 percent each.

The volatility index India VIX also rebounded 6.3 percent to 19.87 levels.

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

We have seen Call writing at 17,500 strike followed by 17,600 strike, while marginal Put writing was seen at 17,500 strike then 17,100 strike.

The data indicates that the Nifty can see an immediate trading range of 17,200-17,800 due to higher volatility.

Banking index

The Bank Nifty opened negative at 38,807, which was also the day’s low. After volatile swings, the index closed 235 points lower at 39,301.

It formed a bullish candle on the daily scale as closing was higher than the opening tick.

It has to hold above 39,250 for a move towards 39,750 and 40,000, while supports are placed at 39,000 and 38,888, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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.

 

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