Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing weakness with range bound action in the last few sessions, Nifty witnessed a decent upside bounce from the lows on Thursday and closed the day higher by 121 points. After opening on a negative, the market has started to show upside bounce from the lows soon after the opening. The upside recovery continued for mid to later part of the session and the intraday dips in between have been bought into. The opening downside gap has been filled and Nifty closed near the highs.
A long bull candle was formed on the daily chart at the lows, which indicate a formation of bullish Piercing Line type candle pattern. The Piercing line pattern is a bullish reversal pattern and normally formed after the declines. Hence, one may expect further upside in the short term.
The display of lack of strength in the downside breakout of 16400 levels in the last two sessions has eventually resulted in market bouncing back sharply on Thursday and closing above the hurdle of 16400 levels.
Conclusion: The short term weakness with range bound action seems to be placed at the upside reversal. Nifty forming bullish candlestick pattern and closing above the hurdle of 16400 levels indicate further upside towards 16700-16800 levels in the near term. A sustainable move above 16500 could open strong upside momentum. Immediate support is placed at 16380 levels.