Nifty Trend: A Technical Analysis

The Nifty 50 index has been on a roll, maintaining its record closing high and continuing its higher top-higher bottom formation for the third consecutive session on July 16. Despite some consolidation, experts believe that the index is likely to move towards its next target of 24,900 in the coming sessions, as long as it sustains above 24,500. However, the formation of a Doji candlestick pattern at the top raises concerns about the market trend.

The Nifty 50 opened positively at 24,616 and reached an intraday all-time high of 24,661, remaining in positive territory throughout the session and closing at 24,613, up 26 points. A Doji pattern indicates indecision among bulls and bears about the future market trend and can act as a potential trend reversal signal. Normally, Doji formations at new highs are not a good sign for the market, and the formation of another Doji with small range movement in the next session could possibly confirm a reversal pattern.

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, while the Nifty is consolidating at higher levels, there is still no confirmation of any significant reversal pattern building at the highs. Further upward movement from here could pull the Nifty towards the 24,900 levels in the next week. Immediate support is at 24,450 levels, he added.

Options data suggests that 24,500 is likely to be the immediate support for the Nifty 50, while the next resistance is seen at 24,700-24,800. The maximum Call open interest was observed at the 25,000 strike, followed by the 24,700 and 24,900 strikes. Maximum Call writing was seen at the 24,700 strike, followed by the 25,000 and 24,800 strikes. On the Put side, the 24,000 strike holds the maximum open interest, followed by the 24,500 and 24,300 strikes. Maximum Put writing was observed at the 24,600 strike, followed by the 24,000 and 24,300 strikes.

Bank Nifty: A Rangebound Market

The Bank Nifty, on the other hand, remained rangebound and closed 59 points lower at 52,397, forming a small bearish candlestick pattern with an upper shadow on the daily charts, indicating selling pressure at higher levels. According to Chandan Taparia, Senior Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, the Bank Nifty has been stuck in a wider range between 52,000 to 52,800 zones over the last few sessions, with stock-specific action within the banking space.

For an upmove towards 52,850 and then 53,000 levels, the Bank Nifty needs to hold above the 52,250 level. On the downside, support is expected at 52,250 and then at 52,000 levels.

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Historical Context:

The Nifty 50 index has been on a strong run, maintaining its record closing high and continuing its higher top-higher bottom formation for the third consecutive session. This technical analysis suggests that the index is likely to move towards its next target of 24,900 in the coming sessions, as long as it sustains above 24,500. The formation of a Doji candlestick pattern at the top raises concerns about the market trend, indicating indecision among bulls and bears about the future market trend.

Summary in Bullet Points:

• Nifty 50 index has maintained its record closing high and continues its higher top-higher bottom formation for the third consecutive session.
• Experts believe the index is likely to move towards its next target of 24,900 in the coming sessions, as long as it sustains above 24,500.
• A Doji pattern has formed at the top, indicating indecision among bulls and bears about the future market trend.
• The formation of another Doji with small range movement in the next session could possibly confirm a reversal pattern.
• Immediate support is at 24,450 levels, and the next resistance is seen at 24,700-24,800.
• Options data suggests that 24,500 is likely to be the immediate support for the Nifty 50, while the next resistance is seen at 24,700-24,800.
• Bank Nifty remained rangebound and closed 59 points lower at 52,397, forming a small bearish candlestick pattern with an upper shadow on the daily charts.
• The Bank Nifty needs to hold above 52,250 to move towards 52,850 and then 53,000 levels, and support is expected at 52,250 and then at 52,000 levels.
• The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management.