Technical View | Nifty forms bearish candle, experts say 19,800 crucial for up move

 The Nifty ended lower on August 1 as it failed to go past the psychologically important level of 19,800 for the second session amid lacklustre trade, with banking & financial services, auto, FMCG, and oil & gas stocks coming under selling pressure.

After opening higher at 19,784, the index climbed to 19,796 but lost all the gains after the initial hour to remain range-bound for the rest of the session.

The index closed 20 points lower at 19,734 and formed a bearish candlestick on the daily charts, but made higher highs and higher lows for the second consecutive day.

If the index manages to close above 19,800 in the coming sessions, it can move to 19,865, with crucial support at 19,600-19,500, or the range-bound trend may continue, experts said.

"A small negative candle was formed with a minor lower shadow. Technically, this pattern indicates lacklustre movement in the market at the hurdle of downsloping trendline around 19,800 levels," Nagaraj Shetti, technical research analyst at HDFC Securities said.

A decisive move above 19,865 will not only surpass the hurdle of a down trendline but also negate the bearish pattern of lower highs and lows. Till then, the short-term trend remains choppy. Immediate support is at 19,600, Nagaraj said.

The options data also indicates that 19,800 will be crucial for the higher side, with immediate support at 19,700.

On the options front, the maximum Call open interest was at 19,800 strike, followed by 20,500 strike, with Call writing at 19,800 strike, then 19,900 strike. The maximum Put open interest was at 19,600 strike, followed by 19,700 strike, with Put writing at 19,700 strike, then 19,300 strike.

"The Nifty 19,800 CE further added open interest today for this week's expiry. This would be the second consecutive day where we have seen Call writing for this week's expiry. This symbolises that the Nifty spot will have a real fight to go past the 19,850 mark," Rahul Ghose, Founder & CEO, Hedged, said.

Bank Nifty

Bank Nifty fell 59 points to 45,593 after rangebound trade and formed a bearish candlestick on the daily chart.

The immediate remains at the 20-day exponential moving average (EMA) placed at 45,384.

"Prices managed to hold on to the key support of 20EMA, but the expected upward momentum from this support is still missing," Rajesh Bhosale, technical analyst at Angel One said.

The market is awaiting a trigger. Traders are probably opting to keep positions light in anticipation of the RBI policy next week.

In such a scenario, "we should monitor key support levels at 45,300–45,200, while immediate resistance lies at 46,000–46,300”, Bhosale said.

Price movement is expected to remain within this range and any significant move in any direction will only occur upon breaking out of these levels, he said. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.