After a one-day public holiday, the Nifty50 extended its uptrend for yet another session on October 6, driven by technology, metal, select banks and auto stocks, though the gains trimmed a bit in the afternoon due to weakness in Europe.
The 50-share Nifty benchmark formed a small-bodied bearish candle on the daily charts as the closing was lower than the opening levels, indicating a temporary weakness in the market. The index has to decisively surpass 17,425, the high of Thursday’s trade, to show a further uptrend and a major upside is possible only above 17,650, the high of September 23, with support at 17,000, experts said.
The broader markets performed much better than benchmarks on positive breadth. The Nifty Midcap 100 and Smallcap 100 indices gained more than 1.2 percent each as around five shares advanced for every two declining shares on the NSE.
The Nifty50 opened higher by more than 100 points at 17,379 and remained above the 17,300 level to hit a day’s high of 17,429. The index finally settled at 17,332, up 57.5 points.
“On daily charts, the Nifty has formed a small bearish candle, which is indicating temporary weakness. However, the medium-term sentiment is still bullish. A fresh uptrend is possible only after the breakout of the 17,425 level and above the same, the index could hit 17,500-17,550 levels,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
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On the flip side, below 17,425 the index could slip till 17,200-17,150, he added.
India VIX, the fear index fell further by 1.30 percent to 19.32 levels, giving comfort to the bulls. Now it needs to further come down for market stability, experts said.
On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,500 strike while the maximum Put open interest was seen at 16,500 strike and then 16,000 strike.
The marginal Call writing was seen at 17,400 strike followed by 17,500 strike while marginal Put writing was seen at 17,300 strike and then 17,000 strike. This Option data indicated that the Nifty may trade in a range between 17,000 to 17,500 levels in the immediate term.
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Bank Nifty opened gap up by over 230 points at 39,344 and continued to trade rangebound. It has been outperforming the broader market from the last four sessions, rising 172 points to close at 39,283.
The banking index formed a Doji kind of candlestick pattern on the daily frame as the closing was near its opening levels, indicating indecisiveness among bulls and bears about future trends.
“Now it has to hold above 39,250 levels to make a march towards 39,750 and 40,000, whereas 38,750 may act as a support followed by 38,500,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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