Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
After showing a range bound action with weak bias in the last few sessions, Nifty witnessed a sustainable upside bounce from the lows on Wednesday and closed the day with gains of 51 points. After opening with a weak note, the market slipped into further decline in the early part of the session. The sharp upside recovery has emerged from the day's low of 19554 levels from the early-mid part of the session and the upside momentum continued in for the mid to later part of the session. The opening downside gap has been filled completely.
A long bull candle was formed on the daily chart with long lower shadow. Technically, this market action is indicating a formation of bullish engulfing pattern. Normally such bullish engulfing patterns after a reasonable decline or near the supports signal chances of upside bounce in the underlying post confirmation.
After the range bound movement in the last few sessions, the market showed false downside breakout of the range in the early part of Wednesday before witnessing a sharp intraday upside bounce. Hence, there is a higher possibility of upside breakout of the narrow range at 19750 levels.
The short term trend of Nifty seems to have reversed up and a follow-through upmove could confirm short term higher bottom reversal pattern. Immediate support is placed around 19600-19550 levels and a decisive move above the hurdle of 19750 levels could pull Nifty towards 19950-20000 levels.