Technical View | Nifty forms Opening Marubozu candle, positive sentiment likely to take index beyond 18,800

Market

Bulls took the charge right from the start on June 13 as the Nifty50 closed above the 18,700 mark for the first time in the last four straight sessions, with buying across sectors barring auto.

A further drop in May inflation and healthy IIP numbers for April supported the market sentiment, while the traders await an interest rate decision by the US Federal Reserve scheduled to be announced on June 14.

The Nifty50 opened the gap up at 18,632, which was also its intraday low, and extended gains as the day progressed to hit a day’s high of 18,729. The index settled with 115 points gains at 18,716 and formed an Opening Marubozu candlestick pattern on the daily charts, indicating bulls dominated Dalal Street.

The Opening Bullish Marubozu candle can also be considered as a Bullish Belt Hold pattern, which generally forms during a downtrend. An Opening Marubozu candle represents extreme bullish behaviour and is formed with a long green body that has an upper shadow but no lower shadow.

With the strong momentum after recent consolidation and correction, the Nifty50 is likely to move towards the 18,800-18,900 levels with the initial support of 18,600 and the crucial support of 18,500 levels, experts said.

“Nifty once again is hovering near the upper band of the consolidation awaiting a positive trigger to witness a breakout. As far as levels are concerned, the 18,600 zone is likely to cushion any blip in the coming period, while the sacrosanct support lies around the 18,500 mark,” Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One said.

Meanwhile, he said the global markets should be watched closely as any further relief could act as a catalyst to open up the next leg of the rally towards the lifetime high zone of 18,888. The technical structure looks robust and with the closure, it is highly anticipated that the index should carry the momentum in the near period, he added.

Option Data

Option data also indicated that 18,700-18,900 is expected to be a crucial resistance area for the Nifty50 going ahead, withholding 18,700 from hereon can take the index towards 18,900-19,000, while the support zone could be 18,600-18,500.

As per Options data, we have maximum Call open interest at 18,900 strike, followed by 18,700 and 18,800 strikes, with meaningful Call writing at 18,900 strike, then 19,000 strike, whereas, on the Put side, the maximum open interest was seen at 18,700 strike, followed by 18,600 strike and 18,500 strike, with meaningful writing at similar strikes.

Bank Nifty

Bank Nifty settled above the 44,000 mark but underperformed equity benchmarks as well as broader markets, rising 136 points to close at 44,080. The index has formed a bullish candlestick pattern on the daily charts, after a three-day correction.

The Bank Nifty index has been trading in a sideways consolidation phase, indicating a lack of clear directional bias. “The immediate resistance level for the index is at 44.200, which has been acting as a hurdle for further upward movement. A successful breakout above this resistance level could potentially trigger trending moves in the index, suggesting a bullish sentiment,” Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said.

On the downside, he feels the index has support at 43,700, which has held the market from significant declines. If the support at 43,700 remains intact, it could provide a buying opportunity for market participants, he said.

The broader markets remained strong with the Nifty Midcap 100 and Smallcap 100 indices rising 1.22 percent and 0.7 percent, respectively on positive breadth, while India VIX, the fear index dropped to 11.11 levels, down by 1.2 percent from 11.25 levels.

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