Tech View: Nifty forms a long bull candle with small shadow. What should traders do on Monday?

The Reserve Bank of India’s (RBI) CRR temporarily curbed market sentiment but eventually ended with a decline, extending its five-session streak. Bank and IT stocks pulled the headline indices, the most. While the S&P BSE Sensex settled down 56.74 or 0.07% at 81,709.12, the broader Nifty50 closed down 30.60 or 0.12% at 24,677.80.

Deepak Jasani, head of retail research at HDFC Securities, said the cash market volume on the NSE fell to Rs. 1.08 lakh crore, the Nifty ended Friday’s session with a marginal loss. The near-term trend of Nifty remains positive, he said.

“On the weekly chart Nifty made the biggest gain since early June and formed a long bull candle with a small upper shadow. Further upside is likely in the next week/s after breaking above the critical barrier of 24,500. The next upside targets are 24,857-24,882 band in the near term and 25,084 later. As seen the support is at 24,351,” Jasani said.

What should traders do? Here’s what analysts had to say:

Rupak De, LKP Securities

Nifty continues to sustain above the breakout from the inverse head-and-shoulders pattern, indicating the strength of the underlying market. In such situations, adopting a buy-on-dips strategy seems prudent, especially with the possibility of a move towards 25,500 in the short term. However, minor pullbacks are possible following a sharp rally, further emphasizing the effectiveness of buying on dips to capitalize on the trend.

Om Mehra, Technical Analyst, SAMCO Securities

Despite oscillating in a narrow range on Friday, the Nifty index remained steady above the crucial 24,650 support level. The primary trend remains positive, as the Nifty trades near the upper band of the Donchian channel, which is trending higher – an indication of potential bullish momentum. Additionally, India’s VIX remains subdued, hovering below the 15 mark, indicating a contraction in volatility and reducing fear in the market. As long as the 24,500 closing level holds, the outlook remains bullish. A decisive move above 24,700 could open the door to upside, while failure to sustain could lead to consolidation.

Hrishikesh Yedve, Asit C. Mehta Investment Intermediates

Technically, on the daily chart, the index took a break after a strong rally and formed a small red candle, while on the weekly chart, it formed a strong bullish candle, indicating strength. Additionally, the index has seen a breakout from an inverted head and shoulders pattern. According to this breakout, the index may test the 25,000-25,200 level in the medium term. Immediate support is placed near 24,550, followed by 24,300. As long as the Nifty remains above 24,300, traders should adopt a buy on dips strategy.

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(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)