After an initial hour of volatility, the bulls gained strength, helping the benchmark Nifty50 close near the day’s high on October 17. The index gained seven-tenth of a percent and formed a bullish candle which resembles a bullish Piercing Line kind of pattern on the daily charts. The rally was supported by banking & financial services, select auto and IT stocks.
As it is a bullish reversal pattern, the index can march towards the 17,500 mark in coming sessions if it decisively holds 17,300, with supports at 17,150 and 17,000 levels, experts said.
The piercing pattern is a bullish trend reversal or bottom reversal pattern that appears towards the end of a downtrend. It opened with a gap down and went on to close above the midpoint of the preceding session. It is an early sign that the bulls are in charge and decline is being bought.
The broader markets also traded higher but underperformed frontline indices as breadth was in favour of declines. The Nifty Midcap 100 index gained 0.16 percent and Smallcap 100 index rose half a percent. About 1,149 shares declined against 857 advancing shares on the NSE.
The Nifty50 opened lower at 17,145 and corrected up to 17,098, but gained strength towards the end of the initial hour of trade and remained in an uptrend in the rest of the session to hit a day’s high of 17,328. The index settled with 126 points gains at 17,312.
Also read – Taking Stock | PSU Banks and financials propel Nifty past 17,300, Sensex gains 491 points
“On the daily chart, the index has formed a Piercing Line pattern which suggests a bullish reversal. The trend and momentum remain positive for the short term,” Rupak De, Senior Technical Analyst at LKP Securities said.
Over the short term, the index is likely to go towards 17,500-17,700. On the lower end, support is visible at 17,100, De added.
The volatility index India VIX slightly inched up by 0.87 percent to 18.42 levels. If the VIX decisively drops below the 18 mark then further market stability is likely, experts said
On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,500 strike, with Call writing at 17,300 strike then 18,300 & 17,800 strikes and Call unwinding at 17,100 & 17,000 strikes.
Also read – Gainers & Losers: 10 stocks that moved the most on October 17
The maximum Put open interest was seen at 17,000 strike followed by 16,000 & 16,500 strikes, with writing at 17,300 strike then 16,200 & 17,000 strikes and unwinding at 16,000 strike then 16,900 strike.
The above Option data indicated that the trading range for Nifty50 could be 17,000-17,500 levels for coming sessions.
Bank Nifty opened flattish at 39,296 and gave a breakout on the daily frame and headed towards the 40,000 mark intraday. It came out of its daily consolidation and closed near its day’s high with gains of around 615 points at 39,920.
The banking index formed a bullish candle on the daily scale with buying seen at any slight decline. Now it has to hold above 39,750 for an up move towards 40,250 and 40,500 levels whereas supports are placed at 39,750 and 39,500 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
