Technical View: Nifty forms bullish candle ahead of muhurat trading, consolidation to continue

The Nifty50 remained rangebound throughout the session and the strength in the last hour of trade helped it close higher on November 13, ahead of muhurat trading tomorrow evening. Select banking & financials and Reliance Industries pushed the market higher, but selling in HDFC Group stocks and L&T capped upside.

The index closed above 12,700 mark and formed small-bodied bullish candle on the daily charts as closing was higher than opening levels.

Experts feel unless Nifty surpasses and holds 12,850 levels, the 13,000 mark is unlikely in the coming sessions, but given the positive market breadth, the major fall is very much unlikely.

The Nifty50 opened lower at 12,659.70 and remained rangebound. The index touched an intraday high of 12,735.95 and low of 12,607.70, before closing the session at 12,720, up 29.20 points.

"Nifty50 appears to be on a consolidation mode as it traded in a 128 points range before signing off the session with a small bullish candle. However, on weekly charts, Nifty appears to have registered a decisive breakout with a sustainable close above its erstwhile life-time high of 12,430 levels registered way back in January 2020," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

Nevertheless, on the short-term charts deep overbought levels accompanied with sell signals on twin momentum oscillators is hinting that Nifty should ideally remain sideways with a negative bias in the next couple of trading sessions, he said.

Hence, major strength in Nifty from current levels shall not be expected unless the index closes above 12,770 levels and in such a scenario initial target shall be around 12,850 levels and beyond that 13,000 can't be ruled out whereas a close below 12,600 shall confirm weakness which can drag down the indices towards the bullish gap zone of 12,367 – 12,280 levels, he added.

The breadth of the market was in favour of bulls as three shares advanced for every two declining shares on the NSE. The Nifty Midcap and Smallcap indices outperformed frontliners, rising 0.94 percent and 0.81 percent respectively.

"The market is consolidating and slowly inching higher towards 12,900/13,000 levels. The Nifty50 index is forming a symmetrical triangle on the intraday chart. It's a bullish continuation formation that would lift the market towards the psychological mark of 13,000," Shrikant Chouhan, Executive Vice President (Equity Technical Research) at Kotak Securities said.

The breadth of the broader market is quite satisfactory, which is indicating a firm grip of bulls and would not allow the Nifty to fall below 12,600 levels in the normal circumstances, he feels.

The volatility cooled down further to below 20 mark with the India VIX falling another 4 percent today.