Technical View | Nifty likely to make a march towards 17,600 as Nifty holds 50 EMA


The Nifty50 remained volatile throughout the session and finally ended above 17,300 with moderate losses on October 7 (Friday), after an uptrend in the previous two trading sessions.

The index has seen the formation of a small-bodied bullish candle on the daily charts, while there was a decent bullish candlestick pattern formation on the weekly scale, following the Hammer pattern at the downtrend in the previous week, maybe confirming the bullish trend going ahead. It gained 1.3 percent for the week, snapping three-week losses.

The 50-share NSE benchmark held 50, 100 and 200 days exponential moving averages (EMA – 17275, 17,106, 17,201 respectively), indicating the trend may remain in favour of bulls. Hence, as long as it holds 17,300 or 50 DEMA, the move towards 17,600-17,700 seems possible in coming sessions, with crucial support at the 17,000 mark, experts said.

The trend in broader markets was mixed on Friday with the Nifty Midcap 100 index falling 0.24 percent and Smallcap 100 index rising 0.24 percent. The breadth was positive as about 1,063 shares advanced against 893 declining shares on the NSE.

The Nifty50 opened lower at 17,287, and remained in a range of about 100 points before ending the session at 17,315 with 17 points losses.

“The underlying uptrend of Nifty remains intact. The consolidation movement may be extended in the early part of next week and the market could eventually witness a sharp upside bounce from the lows by next week,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

Also read – Taking Stock | Market ends flat amid volatility, Nifty holds 17,300; IT, metal stocks drag

A decisive upside breakout of the hurdle of 17,450 is likely to pull Nifty towards another important resistance of 18,000-18,100 levels. Immediate support is placed at 17,200 levels, the market expert said.

The volatility index India VIX fell by 2.6 percent to 18.81 levels, giving good support to the market. Hence, if the volatility cools down further, then further stability can’t be ruled out in coming sessions, experts said.

On the Option front, we have seen maximum Call open interest at 18,000 strike, which can be crucial resistance in the coming days, followed by 17,500 strike, with Call writing at 18,000 strike and then 18,200 strike. The maximum Put open interest was seen at 17,000 strike, which can act as a crucial support level for the Nifty50 in short term, followed by 16,000 strike, with Put writing at 17,000 strike and then 17,300 strike.

The above Option data indicated that the Nifty50 may remain in a range of 17,000-17,500 in the immediate term.

Also read – Gainers & Losers: 10 stocks that moved the most on October 7

Bank Nifty saw a gap up opening at 39,093 and traded in a range of about 400 points on Friday. The banking index closed with more than 100 points loss at 39,178 and formed a Doji kind of pattern formation on the daily charts, indicating indecisiveness among bulls and bears about the future trends. On the weekly scale, there was a bullish Engulfing kind of pattern formation and the index closed 1.4 percent higher.

“The index has managed to sustain above 50 EMA (36,705) on the daily chart. The RSI is entering a bullish crossover. Over the short term, the index may move towards 40,000. On the lower end, support is visible at 38,500,” Rupak De, Senior Technical Analyst at LKP Securities said.

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