Technical View: Nifty forms bullish candle, next target seen at 13,320

The Nifty50 climbed a percent to end at a record closing high on December 4 as the bulls tightened grip over Dalal Street after the RBI kept policy rates unchanged and maintained an accommodative stance. The central bank also assured about ample liquidity support going ahead.

All sectoral indices participated in the run, though broader markets underperformed the benchmark indices. The Nifty50 formed a bullish candle on the daily as well as weekly charts, as closing was higher than opening levels. It gained 2.2 percent for the week.

The momentum is likely to continue in the coming days, too, and the index can hit 13,320 if it holds 13,150, experts say.

For the time being, as the momentum is strong and the bulls are in control, traders can look for stock-specific trading opportunities by maintaining a market stop below 13,150 levels on a closing basis, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.

The Nifty50 continued forming higher highs-higher lows for the fifth day. It opened higher at 13,177.40 and witnessed volatility but gained strength again in the last hour of trade to hit an intraday record high of 13,280.05. The index closed at 13,258.50, up 124.60 points.

"The bulls continued to defy gravity to register yet another milestone with a first-ever close above 13,200 levels before signing off the week with a bullish candle, which witnesses a weekly range of 318 points," Mohammad said.

Markets are in control of the bulls and if the index sustains above 13,152 in the next session, it can head towards 13,320. A higher target of 13,550 can't be ruled out in the next couple of days, he said.

If the Nifty trades below 13,150 for the most part of the next session, then intraday weakness can creep in to drag it down to 13,100, he said.

The index has to hold above 13m100 zones for an up move towards 13,400, while on the downside, major support exists at 13,000.

India VIX was down by 5.12 percent from 19 to 18.02 levels, which indicated that bulls were in control and declines could be bought in the market.

The options data suggested that the Nifty50 could trade in the 13,100-13,400 range over the medium term. Maximum Put open interest was at 12,000 followed by 13,000 strike while maximum Call open interest was at 13,000 followed by 13,500 strike. Marginal Call writing was seen at 13,300 then 13,600 strike while Put writing was seen at 13,200 then 13,000 strike.

The Bank Nifty opened positive at 29,573.40 and after a small dip, it continued northward. It respected the previous day's close of 29,450 and rallied to hit an intraday high of 30,162.30 in the second half of the session.

It gave the highest daily close in the last 192 trading sessions and settled the day with gains of around 603.60 points, or 2.05 percent, at 30,052.40.

The index formed a bullish candle on the daily and weekly charts. "The Bank Nifty continued to form higher highs–higher lows from the last five weeks. Now it has to hold above 29,500 to witness an upmove towards 30,500 and higher zones, while key support is seen at 29,200," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

A positive setup was seen in Tata Chemicals, InterGlobe Aviation, Hindalco, ICICI Bank, Sun Pharma, UltraTech Cement, SBI, HUL, Tata Consumer, Axis Bank and Biocon, while weakness was seen in Ambuja Cements, Shriram Transport Finance, ACC and Reliance Industries, he added.