Technical View | Consolidation likely for Nifty but momentum remains strong


The Nifty50 remained under pressure throughout the session and snapped an eight-day winning streak on December 2 as the bulls gave up their control. Profit booking as well as weak global cues weighed on sentiment on the last of the week.

The index has formed a bearish candle on the daily charts as the closing was lower than the opening levels, but it held the median of the previous green candle (November 30) as well as took support at the 18,600 level on Friday. Hence, after the recent run-up, consolidation can be seen in coming sessions but overall the momentum remains strong that can take the Nifty50 towards 19,000 in short term, with crucial support at 18,300, experts said.

On the weekly scale, the index has formed a bullish candle and closed with a percent gain, continuing the uptrend for yet another week and higher highs formation for the seventh consecutive week.

The Nifty50 opened lower at 18,752 and corrected up to 18,639, an intraday low. The index showed some recovery from the day’s low and closed with 116 points loss at 18,696.

“The chart structure construes a positive development, with the indices being in a cycle of higher highs – higher lows,” Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One said.

According to him, 18,500 is expected to act as the sacrosanct support for the index. While on the higher end, the swing high of 18,900 odd zone is expected to provide some intermediate resistance, followed by the psychological mark of 19,000 in the near term, the market expert said.

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The Nifty50, as per Options data, is expected to trade in the range of 18,500-19,000 levels in the immediate term, while the broader trading range would be 18,000-19,000 levels.

The maximum Call open interest remained at 19,000 strike, indicating the major resistance area for the Nifty50, followed by 20,000 strike, with Call writing at 18,800 strike then 18,700 strike, while the maximum Put writing was seen at 18,000 strike, the critical support for the index, followed by 18,500 strike, with Put writing at 17,800 strike then 18,100 strike.

The volatility at lower levels remained favourable for bulls, hence 19,000 in coming sessions can’t be ruled out, experts said, though it increased moderately by 0.67 percent to 13.45 levels.

Bank Nifty opened below the 43,000 mark at 42,977 and remained in a range of about 200 points before closing the session with 157 points loss at 43,104. The banking index has formed a decent bullish candle on the daily as well as weekly scale making higher highs higher lows for the fourth straight week.

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“During the day, Put writers have protected the 43,000 mark; whereas on the higher end, the index failed to move beyond 43,150. The daily RSI (relative strength index) has entered a bearish crossover,” Rupak De, Senior Technical Analyst at LKP Securities said.

Over the short term, he feels the trend is likely to remain sideways to negative. On the lower end, support is visible at 42,900-42,700, and the resistance on the higher end is visible at 43,200-43,500, the market expert said.

The broader markets maintained an upward trend, with the Nifty Midcap 100 and Smallcap 100 indices rising 0.9 percent and 0.6 percent, respectively.

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