The Nifty rebounded and traded higher throughout the session to close more than half a percent higher on July 5, driven by banking & financials, metals, select auto, and FMCG stocks.
The index formed a bullish candle on the daily chart as the closing was higher than the opening level after forming a Hammer pattern on July 2. Experts feel 15,900 will be the crucial level to watch out for.
Though trading bias looks bullish, traders should wait for a close above 15,900 before creating long side bets, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in.
The Nifty50 opened higher at 15,793.40 and hit the day’s high of 15,845.95 in the final hours of trade. The index climbed 112.20 points to close at 15,834.40.
As long as the Nifty sustains above the day’s minor gap area of 15,762–15,738, it can bounce to the higher end of the range by retesting lifetime highs of around 15,915, Mohammad said.
For a sustainable up move, the index needs a close above 15,900, which will open up a higher target of 16,300, he said.
In the next session, intraday traders can expect a minor hurdle at 15,846 on the upside, he said. Intraday support is placed at 15,738, and if the Nifty closes below it, then it can again make the index vulnerable to a bear attack, with an initial target close to 15,600.
Volatility continues to fall, hovering near its lowest level in 18 months. India VIX fell marginally by 0.19 percent from 12.09 to 12.06 levels.
On the options front, maximum Put open interest was seen at 15,500 followed by 15,000 strikes, while maximum Call open interest was seen at 16,000 followed by 16,500 strikes. Call writing was seen at 16,200 then 16,300 strikes, while Put writing was seen at 15,600 then 15,800 strikes. Option data indicated that the Nifty50 could see an immediate trading range of 15,600 to 16,000 in the coming sessions.
The Bank Nifty opened the gap up above 35,000 and moved in the position direction throughout the day towards 35,234. It outperformed the Nifty to settle with gains of 402.10 points at 35,212. It formed a bullish candle on a daily scale and negated its lower highs-lower lows of the last four sessions." The Bank Nifty has to hold above 35,000 to move up towards 35,500 and 35,750, while on the downside support is seen at 34,750 and 34,500," said Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services.
On the front of the stock, a bullish setup was seen in Muthoot Finance, Tata Power, IRCTC, Godrej Consumer Products, DLF, Pidilite Industries, Hindalco, NALCO, SBI, HPCL, Federal Bank, Manappuram Finance, L&T, Bajaj Finance, ICICI Bank, Axis Bank, and Divis Labs. Weakness was seen in NMDC, Adani Enterprises, Wipro, Bata India, Britannia, and Lupin, he said.