Technical View | Nifty forms Bearish Belt Hold pattern, volatility continues ahead of monthly FO expiry

Representative image.

Representative image.

The Nifty remained range-bound amid bouts of volatility on November 23 to close 23 points higher at 18,267, ahead of the expiry of November futures & options contracts.

Participants were also cautious, awaiting the release of the minutes of the US Federal FOMC minutes later in the night.

The index formed a Bearish Belt Hold pattern on the daily charts as the opening price was the highest point of the day and the index declined throughout the session making up the large body.

The candle will either have a small or no upper shadow and a small lower shadow. The pattern generally indicates a change in sentiment from bullish to bearish.

The range-bound trade is expected to continue with immediate support at 18,200 and resistance at 18,400, experts said.

“For traders, 18,200 would be the immediate support level and above the same, the index can retest the level of 18,350-18,400. On the flip side, dismissal of 18,200 can accelerate the selling pressure to 18,100-18,070 levels,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

The options data indicates that the Nifty may trade in the 18,100-18,400 range in the coming sessions. The maximum Call open interest was at 18,300 strike followed by 18,400 strike with Call writing at 18,300 strike then 18,350 strike.

The maximum Put open interest was seen at 18,000 strike followed by 18,200 strike, with Put writing at 18,300 strike then 18,250 strike.

Volatility remained on the lower side. India VIX, which measures the expected volatility in the market over the next 30 days, rose 1.44 percent to 14.04 levels.

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Banking index

The Bank Nifty opened 200 points higher at 42,668 and after range-bound move in the first half, it hit a new high of 42,860.55 but failed to hold on to it. The index still ended at a record closing high of 42,729, up 272 points.

The index formed a Doji candle on the daily frame made higher highs-higher lows from the last two sessions.

“Now if the Bank Nifty holds the 42,500 mark, then it can make an up move towards 43,000 and 43,250 levels, with supports at 42,350 and 42,200 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.

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The broader markets closed with moderate gains on positive breadth. The Nifty midcap 100 index rose a third of a percent and the smallcap index gained half a percent. About 1,085 shares advanced and 897 declined on the NSE.

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