Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing range-bound action in the last few sessions, Nifty shifted into a smart upside bounce from the lows on Friday and closed the day lower by 28 points. Nifty opened on a negative note and slipped into further weakness soon after the opening. It witnessed a sharp upside bounce from the day's low of 15511 levels and the upside recovery continued for the whole session and Nifty closed near the highs.
A small negative candle was formed on the daily chart with a long lower shadow. Technically, this pattern indicates the formation of the hammer-type pattern (not a classical one). Such market action signals a short-term bottom reversal pattern for the market. This could also indicate a false downside breakout of the small range at 15700 levels. This is a positive indication, and one may expect further upside in the short term.
A small negative candle was formed on the weekly chart with a lower shadow. The strong weekly support has been held on the edge around 15750 levels as per the week's closing. The larger negative sequence of lower tops and bottoms is intact and the present up move could be in line with the formation of a new lower top of the sequence.
Conclusion: The short-term trend of Nifty continues to be range bound. But Friday's sharp upside recovery from the lows hints at the possibility of more upside for the market ahead. A sustainable upmove only above 15900-15950 levels could bring bulls back into the market and that could possibly pull the Nifty towards the next upside levels of 16200-16300 levels quickly. Immediate support is placed at 15630.