Technical View | Nifty forms bullish candle, MPC meet outcome awaited

The Nifty overcame volatility and mixed global cues to end higher on August 3, as investors await the outcome of the Reserve Bank of India’s Monetary Policy Committee meeting later in the week.

The index, which closed 43 points higher at 17,388, formed a small-bodied bullish candle on the daily charts, as the closing was higher than the opening levels.

The Nifty made a smart recovery from the day’s low but continued to face resistance at 17,400, so consolidation will continue unless the index decisively breaks the range on either side.

“As the index did not violate the intraday low of Tuesday’s session but smartly recoiled with an intraday low of 17,225 levels clearly hints that the current move is still an attempt to consolidate and hence, can move in either of the directions going forward,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

Also read: Taking Stock: Market gains on another volatile day; IT stocks shine

A close below 17,225 can trigger a short-term downswing, with an initial target present in the zone of 17,018 and 16,947. A close above 17,390 can extend the upswing towards 17,550 and then by 17,800, he said.

For the time, intraday traders with a high-risk appetite can go long above 17,400 for a modest target of 17,500 with a stop-loss below the intraday low. Shorting opportunity shall arise below 17,215, the market expert said.

The broader markets underperformed the benchmark. The Nifty Midcap 100 and smallcap 100 indices fell 0.7 percent and 0.5 percent.

Also read: Axis Securities sees Nifty at 18,400 by March, bets on these 16 stocks

The volatility index cooled down after a sharp uptrend in the previous two sessions. India VIX, an indication of volatility expected in the market over the next 30 days, fell 0.4 percent to 18.45 levels.

On the options front, maximum Call open interest was seen at 18,000 strike followed by 17,500 and 17,300 strikes. Call writing was seen at 17,900 strike then 18,500 & 18,000 strikes. The maximum Put open interest was at 16,500 strike followed by 17,000 and 16,000 strikes, with Put writing at 16,800 strike, then 16,000 & 16,600 strikes.

The data indicates that the Nifty may trade in the broad range of 16,800-17,900 in the coming sessions.

Banking index

The Bank Nifty opened lower at 37,954 and remained under pressure for most of the session and sank to the day’s low of 37,693.

It closed 35 points down at 37,989 and formed a Doji pattern on the daily charts, indicating indecisiveness among bulls and bears ahead of the RBI policy outcome on August 5.

Also read: Gainers & Losers: 10 stocks that moved the most on August 3

“The index needs to close above 38,200 for a continuation of the uptrend towards the level of 38,500-38,700 levels. The index’s downside support stands at 37,500 and if the same gets breached then it will witness further selling pressure towards the 37,000 mark,” Kunal Shah, Senior Technical Analyst at LKP Securities.

The index will give a clear direction once the RBI policy is announced, he 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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