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Tech View: Nifty forms bullish candle, but profit booking can’t be ruled out

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NEW DELHI: Nifty50 on Thursday took out its immediate resistance at 11,300 level at the very start, paving the way for a strong rally towards the 11,450 level. The NSE barometer formed a bullish candle on the daily chart and negated the formation of lower highs and lows of previous session. It also breached its 20-day simple moving average, whose value is placed at 11,412 level.

That said, Thursday’s bounce was led partly by an unusual sharp 7 per cent surge in the shares of Reliance Industries. A profit booking move cannot be ruled out, even though technical charts suggest a bullish bias ahead, analysts said.

“As long as Nifty50 sustains above the 11,278 level on a closing basis, a sideways consolidation is likely in the 11,280 -11,550 range. However, since the gains were partly led by a 106-point contribution from Reliance Industries, the chances of Nifty50 seeing some profit booking in the resistance zone of 11,450-507 can’t be ruled out in the next trading session,” Mazhar Mohammad of Chartviewindia.in.

For the day, Nifty closed at 11,449, up 171 points or 1.52 per cent.

A24ETMarkets.com

Nagaraj Shetti of HDFC Securities said Nifty is currently placed at the cluster resistance of the opening downside gap area of September 4. “Besides, it is placed around a minor up-sloping trend line on the daily chart, and a significant intermediate trend line on the weekly chart in the 11,450-11,500 range. Hence, this area is going to be a crucial hurdle for the index in the near term. Renewed buying participation could only occur above this resistance,” Shetti said.
Rohit Singre of LKP Securities said even as Nifty Bank climbed 1 per cent for the day, it ended up forming an indecisive Doji candle on the daily chart, hinting at uncertainty ahead. Bank stocks account for a significant weightage in Nifty50. For now, Singre sees some more gains towards the 11,500-11,550 zone.

Check out the candlestick formations in the latest trading sessions

A25ETMarkets.com


Independent analyst Manish Shah said the MACD oscillator is still in ‘sell’ mode and the 14-day relative strength indicator, or RSI, remains below 60. “Price action is showing signs of an upturn, which is not confirmed by technical oscillators. By their inherent nature, most of the oscillators are lagging in nature and a confirmation usually comes in late. Nifty has taken out the resistance in the 11,430-11,450 zone. If the breakout holds, we should see continuation of the rally to the 11,575-11,600 zone,” he said.

Nifty50 has seen its highest close in five sessions, said Chandan Taparia of Motilal Oswal Securities. “As long as it holds above the 11,333-11,350 zone, Nifty could head towards the 11,550-11,600 zone. On the downside, medium-term support exists in the 11,200-11,180 area,” he said.

Rajesh Palviya of Axis Securities suggested a similar area of resistance in the 11,530-11,580 range.

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