Tech View: Nifty forms long bearish candle; suggest strong profit booking

NEW DELHI: Nifty50 on Thursday saw a roller-coaster ride as it ended near the 11,650 level after hitting the 12,000 mark for the first time ever earlier in the day. The index formed a long bearish candle on the daily chart, with a long upper wick, suggesting that traders got exhausted and took profits off the table.

The 11,590-615 range is largely expected to act as support, below which profit taking may intensify. Thursday’s price behaviour suggested that a short-term top is in place at 12,041, said Mazhar Mohammad of Chartviewindia.in.

“If Nifty slips below 11,614 level next session, it may eventually try to bridge the bullish gap in the 11,590-426 zone. However, as long as Nifty sustains above 11,400, corrections into the said gap zone, preferably around 11,500 level, can be considered as an opportunity to go long,” Mohammad said.

For the day, Nifty closed at 11,657, down 80.85 points, or 0.69 per cent.

From trading perspective, 'sell on rise' would be the preferred strategy going forward, said Gaurav Ratnaparkhi of Sharekhan. “On the higher side, the 11,770-11,800 range shall act as a key area, where one can look to initiate fresh short positions,” he said.

The index broke below the two-day low of 11,680 to shut shop around its weekly opening level, said Chandan Taparia of Motilal Oswal Securities. If the index is to take its recent positive momentum towards 11,760 level, it has to respect its multiple support at 11,550 in the coming days, Taparia said.

Aditya Agarwala of Yes Securities sees more profit booking if the index trades below 11,590. In that case, Nifty may fall to the gap area in the 11,520-11,430 zone. “However, a sustained trade above 11,700 can take the index higher to 11,860 and 11,950 levels,” he said.