India Markets closed

Technical View: Nifty forms strong bull candle despite geopolitical concerns; keep a stop below 10,370

Uttaresh Venkateshwaran
1 / 1

Saurabh Mukherjea suggests moving away from midcaps to derisk your portfolio

The other way to look at this approach would be to look at high quality companies and the ones with good track record revenue growth.

Kshitij Anand

Moneycontrol News

Bulls managed to recoup early losses on D-Street and helped the Nifty close above 10,500 levels for the first time since February 26 on Monday. The index formed a strong bullish candle on the daily candlestick charts.

Despite weak global cues Nifty managed to close above its crucial resistance levels of 10500 towards the close of the trade which has opened fresh target for the index towards 10600 levels. Investors are advised to maintain their long positions with a stop below 10370 levels.

The Nifty index opened gap down but witnessed sustained buying interest throughout the trading session to settle near day’s high which suggests strength in Indian markets.

The Nifty Midcap index and the Nifty bank gain more than 100 points each. The market breadth was in favour of declines despite gains. The advance-decline ratio stood at 1:1.

The Nifty which opened at 10398 slipped marginally to hit its intraday low of 10396 before bouncing back. It hit an intraday high of 10540 before closing 47 points higher at 10,528.

“In line with our expectations, bulls shrugged off the geopolitical tensions as initial dip was bought into by the market participants which resulted in a strong bullish candle formation suggesting that the trajectory of this market is changing from sell on rallies to buy on dips mode,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, told Moneycontrol.

“However, as Nifty heads towards much higher levels, real challenge for bulls lies in destroying the critical resistance placed around 10630 levels. Once this level is decisively conquered then this upmove shall get extended further towards 10900 kind of levels,” he said.

But as the index registered 8th successive close in positive terrain some pause or consolidation can’t be ruled out going forward in next couple of trading sessions.

Mohammad further added that on the downsides positional traders are advised to place a stop below 10370 levels breach of which on closing basis shall once gain favour bears. Till then all dips should be considered as an opportunity to go long.

India VIX moved up by 0.51% at 14.21. VIX has to cool down to extend its positive momentum. On the options front, maximum Put OI was seen at 10300 followed by 10400 strikes while maximum Call OI is at 10700 followed by 10500 strikes.

Significant Put writing at 10500 and 10400 strike which is shifting its support to higher side while Call unwinding is seen at all immediate strike prices which gives room for further up move in the market.

“Option band suggests an immediate trading range in between 10450 to 10650 zones. The Nifty recovered sharply from 10396 levels and formed a Bullish Marubozu Candle on the daily scale which implies complete dominance by the bulls,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“It has been making higher highs from last eleven consecutive trading sessions implying a continuation of an uptrend,” he said.

Taparia further added that till Nifty holds above 10480 it could extend its gains towards 10580 and then 10630 levels while on the downside supports are seen at 10480 then 10440 levels.