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The Nifty50 ended below 17,200 in a highly volatile session of trade on January 27 amid weak global cues but healthy buying in the banking names helped the index recover from the day’s low.
The index started on a negative note after US Federal Reserve kept the policy rate unchanged but indicated interest rate hikes going ahead.
In the near term, the Nifty should ideally consolidate in the zone of 17,309 to 16,850. In case the bulls manage to push the index beyond 17,309, strength should eventually expand towards 17,600 levels, said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.
A close below 16,836, however, would lead to the resumption of weakness, with the initial target placed around its 200-day moving average whose value is placed at 16,600.
For the time, it would be prudent to remain neutral on the index till more signs of strength emerge, said Mohammad.
The Nifty formed a small-bodied bullish candle similar to a harami and an inside bar on the daily scale, with longer lower shadow indicating buying at declines.
“Now, the Nifty has to hold above 17,180 to negate its lower highs formation and to start the next leg of bounce towards 17,350 and 17,500, whereas support exists at 17,000 and 16,850,” Chandan Taparia of Motilal Oswal said.
On the options front, since it is the beginning of new series, OI inventory is scattered at various strikes.
Maximum Call OI (open interest) is at 18,000 then 17,500 strike, while Maximum Put OI is at 16,500 then 16,000 strike. Options data suggests a wider trading range between 16,500 and 17,500 zones.
India VIX was down by 1.38 percent from 21.35 to 21.06 levels after it spiked at the start of the session but failing to move above 24 zones from the last three sessions.
Bank Nifty
The Bank Nifty opened negative but managed to hold its opening levels and scaled above 38,100.
It formed a strong bullish candle on the daily scale after a bullish engulfing during the previous session.
It has to hold above 37,750 for an up move towards 38,250 and 38,500, whereas support is seen at 37,500 and 37,250, Taparia said.
On the stock front, a bullish setup was seen in Canara Bank, Bank of Baroda, Federal Bank, Axis Bank, SBI, Cipla, AU Small Finance Bank, Cholamandalam Financial Holdings, Kotak Mahindra Bank, Indian Hotels, Maruti Suzuki, Tata Motors, Hindustan Aeronautics, Bajaj Auto and Tata Power
Weakness was seen in Indiamart Intermesh, Coforge, Mindtree, Indigo, Jubilant FoodWorks, Pidilite Industries, Ipca Labs, Balkrishna Industries, HDFC AMC, HCL Technologies and Tech Mahindra, said Taparia.
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