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Nifty Develops a Hammer Candlestick And Needs to Hold 15,183 in Order to Continue Higher

Experts think the Nifty defended 15,183, the June 17 low, which could operate as a support for the market in the coming days.

On June 20, the Nifty finally closed in the green after six sessions, but the attitude in the broader market remained unchanged.

The index rose to a high of 15,382 after opening higher at 15,334.50. It fell to a day’s low of 15,191 in a tumultuous trading, but recovered the lost ground to finish 57 points higher at 15,350.

The broader market did not get any relief. The Nifty midcap 100 and smallcap 100 indices, respectively, were down 2.3% and 3.2%.

Experts believe the market will be waiting for testimony from US Federal Reserve Chairman Jerome Powell later this week, after the central bank raised interest rates by 75 basis points. After May inflation surged to a 41-year high, it also signalled another 50-75 basis point hike at the next policy meeting.

On the daily charts, the Nifty developed a Hammer candlestick, a bullish reversal pattern that appears after a decline. In the previous six sessions, the index had corrected by more than 7%.

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There is no above shadow, a short body, and a long lower shadow in this design. The market rallied back after testing its support, which is where demand is located, as indicated by the long lower shadow.

The index defended its low of 15,183 on June 17, indicating that it will operate as a support for the market in the days ahead. Experts predict that if the index maintains its current position, it might rise to 15,600.

On June 20, the sentiment indicator Stochastic crossed over to the positive side, while the relative strength index (RSI) flattened, signalling a bit more recovery.

“While the advance-decline ratio skewed sharply in favour of bears, positive divergences and momentum oscillators generating buy signals appeared on lower time frame charts,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia, said, adding that the Nifty managed to defend last Friday’s low of 15,183 levels.

According to him, the Nifty appears to be preparing for a pullback rally. As long as it maintains above 15,181, it can perform a relief rally with an initial aim of 15,600.

According to the market analyst, a closing below 15,181 might push the price down to 14,900.

The India VIX index, which measures predicted market volatility, fell 1.51% to 22.41. Experts believe that because volatility is high, the bears will have the upper hand in a tug of war.

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Maximum Call open interest was found at 16,000 strike, followed by 16,500 strike, and maximum Put open interest was seen at 15,500 strike, followed by 15,000 strike in the options market.

Call writing was seen at 15,500 strike, followed by 15,700 strike, and small Put writing was seen at 15,200 strike, followed by 15,000 strike.

According to the statistics, the Nifty’s immediate trading range will be 15,100-15,700.

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The Banking Index is a Measure of How Well a Company

After taking support at 32,400, the Bank Nifty began positive at 32,873 and gained strength. It fluctuated in a 500-point range but failed to break through the 33,000-point barrier.

On the daily time frame, the index developed a small-bodied bearish candle with a long lower shadow, losing 58 points to close at 32,685.

“Weakness may be witnessed between 32,250 and 32,000 levels until it remains below 33,000 mark, whilst hurdles are positioned at 33,333 and 33,500 levels,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.

HDFC, HUL, Dabur India, Britannia Industries, Asian Paints, Apollo Hospitals Enterprises, HDFC Bank, Infosys, Nestle India, Alkem Labs, and ITC all had a positive setup.

Vedanta, Bandhan Bank, Tata Power, NALCO, BHEL, GAIL, IDFC First Bank, Tata Chemicals, InterGlobe Aviation, Deepak Nitrite, Jindal Steel & Power, Tata Steel, Manappuram Finance, Bank of Baroda, MCX, M&M Financial, Piramal Enterprises, and UPL, on the other hand, showed weakness, he noted.

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