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Technical View | Nifty forms bullish candle, experts say sustainable rally only above 16,172 – Moneycontrol

On a day of wild swings, the Nifty gained strength in the last hour of trade to close 83.40 points, or 0.53 percent, higher at 15,835.40 on July 4 and formed a bullish candle on the daily chart.

Experts say the next critical hurdle for the index will be 15,927-16,172 and for a sustainable upmove, the Nifty has to close above 16,172.

“The Nifty50 made a smart recovery from the intraday low of 15,661 levels and registered a close above its 20-day SMA (simple moving average) which is a much-needed positive development,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

The strength, however, can be limited with critical hurdles present at 15,927 and 16,172. For a sustainable up move, the index needs a close above 16,172 levels and in that scenario, it Nifty can extend the rally towards its 200-day moving average (17,152), he said.

Positional traders with a high risk-taking ability can go for long positions with a stop-loss below 15,660 and look for a target of 16,100, the market expert said.

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Sentiment indicators also suggest a northward journey, with the relative strength index (RSI) moving from 44.72 to 47.38 and the Stochastic climbing to the oversold region with an uptrend signal.

The broader markets also participated in the uptrend, with the Nifty midcap 100 and smallcap 100 indices climbing more than .06 percent each on positive breadth. About three shares advanced for every two declining shares on the NSE.

India VIX, the fear index, cooled to 20.97 levels, falling 1.3 percent, giving some respite to the bulls.

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On the options front, the maximum Call open interest was seen at 17,000 strike followed by 16,500 strike, while maximum Put open interest was seen at 15,000 strike followed by 15,500 strike.

We have seen marginal Call writing at 16,500 strike then 16,200 strike, while Put writing was seen at 15,800 strike followed by 15,700 strike.

The data indicates that the Nifty could see a broad trading range of 15,300 to 16,300 in the coming sessions.

Banking index

The Bank Nifty opened flat at 33,559 but soon continued its uptrend from the previous session. Follow-up buying was seen at all levels and trended upwards on the shorter time frame. After taking support near 33,500, the index jumped in the last hour to close 401 points higher at 33,941.

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It formed a strong bullish candle on the daily frame as the closing was higher than the opening level.

“It has to hold above 33,750 levels to see an upmove towards 34,250 and 34,500 levels whereas supports are seen at 33,500 and 33,333 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

On the stock front, Taparia said positive setup was seen in Siemens, Godrej Consumer Products, Hindustan Unilever, Hindustan Aeronautics, Trent, Astral, Britannia, United Breweries, IndusInd Bank, City Union Bank, PI Industries, REC, Tata Power, Indian Hotels, Dabur, Cummins India, Coromandel International, HDFC AMC, ICICI Bank, Container Corporation, ITC, Adani Enterprises, Axis Bank, Federal Bank, SBI Life, Jubilant Foodworks, SBI and United Spirits.

Weakness was seen in ONGC, TCS, AU Small Finance Bank, Polycab, IndiaMART InterMESH and Mphasis, he added.

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.