Markets

Tech view: Nifty forms Hammer candle, may extend rise this time

NEW DELHI: The Nifty50 rallied over 100 points on Monday to get past the 10,600 level. The index formed a Hammer candle on the daily chart, suggesting that every selling was bought into. The index has its upside capped in the 10,740-10,775 zone, as the advance-decline ratio needs to be improved for further strength.

The 10,489 level will act as a crucial support in the immediate term. For the day, Nifty rose 101.85 points, or 0.97 per cent, to 10,628. The ambiguity seems to have disappeared for now, said Sameet Chavan of Angel Broking.

“On the hourly charts, the index oscillated within the boundaries of a Falling Wedge pattern. It found support at the lower end of this pattern at 10,500 and then went on to confirm a breakout at the higher end i.e. 10,580. We will not be surprised to see Nifty extend this move towards 10,690 and 10,740 levels,” he said.

The advance-to-decline ratio was negative for the day, as only 681 stocks settled higher on NSE against 1,033 declines. This could be a cause of concern.

Any rise would be shallow, and the index could face headwinds around the 10,740-10,821 range, said Arun Kumar, Market Strategist, Reliance Securities.

Similar views were echoed by Mazhar Mohammad of Chartviewindia.in, who said a bigger rally going forward should not be expected unless the Nifty50 registers a fresh breakout above the 10,774 level.

The index, meanwhile, is approaching the 200-day SMA placed at 10,755. A sustained trade above 10,650 will take it to 10,755- 10,780 levels, said Aditya Agarwala of YES Securities.

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