Technical View | Recovery helps Nifty form bullish candle, 17,600 next level to watch

FMCG, IT, metal and oil & gas stocks supported the market.

FMCG, IT, metal and oil & gas stocks supported the market.

The Nifty50 on October 20, also the weekly expiry day, was about to break the northward journey that started off last Friday, but the rally in late trade helped the benchmark index continue its uptrend for the fifth straight session. The index withheld the crucial 17,500 mark, despite negative global cues.

FMCG, IT, metal and oil & gas stocks supported the market.

The 50-share index formed a bullish candlestick pattern on the daily charts as the closing was higher than the opening levels. Now, the index first needs to give a strong closing above 17,600, the previous day’s high, as a decisive close above the same can take the Nifty50 towards 17,700-17,900 levels in coming sessions, with near-term support at 17,400, experts said.

But the broader markets had a muted performance given the breadth was in favour of bears. The Nifty Midcap 100 index was down a third of a percent and Smallcap 100 index gained one-tenth of a percent. About 10 shares declined for nine advancing shares on the NSE.

The Nifty50 opened lower by 89 points at 17,423 and after some volatility, it showed a decent recovery in late trade to hit a day’s high of 17,584. Finally, the index settled with more than 50 points gains at 17,564.

“The Nifty remained volatile during the session as Nifty recovered from the day’s low to close around the high. The 50 DEMA (day exponential moving average) remained below the index value on the daily chart, confirming the ongoing uptrend,” Rupak De, Senior Technical Analyst at LKP Securities said.

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The momentum indicator on the daily chart remained in the bullish crossover. The short-term trend remains positive with the potential to take the Nifty towards 17,700, and on the lower end, support is visible at 17,400, the market expert 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 17,800 strike then 17,900 strike. The maximum Put open interest was seen at 17,000 strike followed by 16,500 strike with Put writing at a 17,500 strike and then 17,400 strike.

The above Option data clearly indicated that the expected trading range for the Nifty50 for coming sessions has shifted higher further to 17,300-17,800 levels, from 17,700-17,300 levels earlier.

India VIX was down by 1.45 percent to 17.23 levels, making the bulls more comfortable at Dalal Street.

Also read – Taking Stock | Sensex, Nifty end with modest gain amid volatility; IT, metal, PSU banks shine

Bank Nifty opened negative at 40,149 and corrected up to 39,850 levels. The banking index showed recovery up to 40,208 levels, but failed to turn positive.

The index closed with 274 points losses at 40,100 and formed a Doji kind of pattern on the daily charts as closing was near to opening levels. Now, it has to hold above 40,000 to make an upmove towards 40,500 and 40,750 levels, whereas supports are likely at 39,750 and 39,500 levels, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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