Technical View | Nifty forms Doji candle, 17,750-17,900 to be crucial resistance area


The Nifty50 had a strong gap up opening and held the 17,700 mark throughout the Muhurat trading session for Samvat 2079 on October 24, tracking positive global mood. But the index has formed Doji candle on the daily charts as the closing was near its opening levels, indicating indecisiveness among bulls and bears about future market trend.

If the index manages to hold 17,700 mark in coming sessions, then the next level to watch out on the higher side would be 17,900, followed by the psychological 18,000 mark, with support shifting higher at 17,500 followed by 17,400 levels, experts said.

All the sectors, barring FMCG, participated in Monday’s upmove, with banking stocks being the consistent supportive segment for the market.

The broader markets, too, gained in a one-hour trading session on Monday, with the Nifty Midcap and Smallcap 100 indices rising half a percent and close to 1 percent, respectively.

The Nifty50 started off trade higher by 160 points at 17,736 and hit an intraday high of 17,778. The index held above 17,700 for the entire session, before closing with 154 points gains at 17,731.

“Going ahead, the next important resistance levels for Nifty are the 17,750 and 17,900 levels. This will be the real test for the bulls, as a close above this zone will confirm that the index is ready to surpass not only 18,000, but also make a strong case for it to test previous all-time highs above 18,500-18,600 levels,” said Himanshu Gupta, VP, Research, at Globe Capital.

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On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 18,500 strike & 17,800 strike, with Call writing at 17,800 strike then 18,000-17,900 strikes and unwinding at 17,600 strike then 17,500 strike.

The maximum Put open interest was seen at 17,000 strike, which is expected to be crucial support for the Nifty in coming sessions, followed by 17,500 & 17,600 strikes, with writing at 17,700 strike then 17,000 strike, and unwinding at 16,500 strike then 16,700 strike.

The above Option data indicated that the expected trading range for the Nifty50 for coming sessions has been shifted higher to 17,500-18,000, from 17,400-17,800 levels earlier.

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The volatility index India VIX inched up a bit by 0.82 percent to 17.42 levels, which needs to fall around 15-16 levels for more stability in the market.

Bank Nifty opened with more than 550 points gains at 41,348 and remained higher for the entire one hour session to hit a day’s high of 41,427. The banking index jumped 521 points or 1.3 percent to close at 41,305 and also formed Doji kind of pattern on the daily charts, but continued making higher high higher low formation for second consecutive session.

The highest Call open interest was seen in at 42,000 strike, which can be crucial resistance for the banking index, followed by 41,500 strike, with Call writing at 41,300 strike then 41,400 strike, while we have seen maximum Put open interest at 40,500 strike, which can be crucial support, followed by 41,000 strike, with writing at 41,000 strike then 41,500 strike.

Bank Nifty is sustaining above its short- and medium-term moving averages. If it settles above the 41,000-41,200 levels, then it can see a further upside towards 41,800 and 42,500 levels in the very-near term, and 43,500 by year-end can also not be ruled out, Himanshu said.

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