The Nifty50 recovered the previous day’s losses to close half a percent higher at 17,737 despite mixed global cues on October 27, the expiry day for monthly futures & options contracts.
It formed a small-bodied bearish candle that resembled the Hanging Man pattern on the daily charts, which is a bearish reversal pattern that appears at the top of an uptrend.
The index faced resistance around 17,800 for a straight third session, hence it can act as a crucial hurdle. If the level is crossed decisively, then 18,000 can’t be ruled out, with support at 17,600-17,500, experts said.
“For the last three sessions, the Nifty has consistently found resistance near the 17,800 level and conversely taking support near 17,625. For Nifty, 17,800 would be the key breakout level and above the same the index could move up to 17,900-18,000,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
A fresh round of selling is possible if the index slides below 17,625. Below it, the index can slip to 17,500-17,450, the market expert added.
All sectors, barring IT, participated in the run. The broader market mirrored the benchmark. The Nifty midcap 100 and smallcap 100 indices gained 0.6 percent and 0.4 percent respectively but the market breadth was not strong. About 1,051 shares advanced against 922 declining shares on the NSE.
Also read: Chalk and cheese? IT services and cement stocks trade at similar valuations
India VIX, which measures the expected volatility in the market, declined 1.67 percent to 16.6 levels.
On the options front, the maximum Call open interest was at 17,800 strike followed by 18,000 strike, with Call writing at 17,800 strike, and unwinding at 18,000 strike then 17,600 & 18,500 strikes.
The maximum Put open interest was seen at 17,700 strike followed by 17,500 strike, with writing at 17,700 strike then 17,800 strike, and unwinding at 17,000 strike then 17,200 strike.
The options data indicates that the Nifty’s trading range for the coming sessions may be 17,500-18,000.
Also read: Gainers & Losers: 10 stocks that moved the most on October 27
Banking index
The Bank Nifty opened 300 points higher at 41,441 and jumped to 41,512. It later wiped out some gains to close 176 points higher at 41,299 and formed a bearish candle on the daily charts.
“The index’s immediate hurdle is seen at 41,500 where aggressive Call writing has been witnessed and once breached above that will see further short covering towards 42,000 level,” Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said.
The index will remain in a buy-on-dip mode as long as it holds the support of 40,500, where fresh Put writing has been witnessed in the November series, he said.
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