Technical View: Nifty forms bullish candle on daily chart

By: | Published: August 18, 2016 4:03 PM

Nifty index opened positive and managed to hold its gain and was holding above 8,665 zones for most part of the day.

nse nifty bse sensexNifty index opened positive and managed to hold its gain and was holding above 8,665 zones for most part of the day. (Photo: Reuters)

Nifty index opened positive and managed to hold its gain and was holding above 8,665 zones for most part of the day. It closed positive with the gains of around 50 points in line with the sustained buying interest from banking and other heavyweight counters. The 50-share index formed a bullish candle on Thursday followed by an insider day which indicates that bulls are getting grip over the bears and set to start fresh up move by retesting the recent high of 8728 and then higher zones.

Now Nifty 50 index has to continue to hold above 8,650 zones to witness an up move towards 8,728 then 8,777 zones while on the downside major support exists at 8,600 zones.

On the option front, maximum Put OI shifted to 8,600 followed by 8,500 strike while maximum Call OI is at 8,800 followed by 9,000 strike. Index has seen shift in maximum Put OI from 8,500 to 8,600 strike which indicates about the shift of support on higher levels. We have also seen significant Put writing at 8,600, 8,700 and 8,800 strike while Call unwinding in all the strike is giving the scope to move on higher side.

India VIX cooled down by 1.56 per cent at 14.55 levels after the spike of last two session which is again started to give comfort to bulls to keep their long position.

Bank Nifty has been making higher high – higher lows from last four sessions and registered a record 52-weeks high by crossing previous hurdle area. It managed to hold above 19,000 and rallied towards 19,400 zones. Now support may shift to 19,000 with a potential up move towards 19,800 zones. It formed a bullish belt candle on daily chart near to highest levels which is showing the strength and outperformance nature compare to broader market.

Leadership of banking space has taken index above 8,665 and now a small follow up might start the next leg of rally as foreign institutional investors (FIIs) are continuously buying in equity segment from last one month and liquidity prevails in the system to drive the market move with a positive sentiment.

(The author is derivatives analyst, equity research at Anand Rathi Financial Services)

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