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The Nifty closed 0.3 percent lower after yet another volatile session but defended the vital 18,600 level on December 6, as information technology, metal, pharma, and auto stocks pulled the market down on the eve of the RBI’s rate decision.
After opening 100 points lower at 18,601, the index hit an intraday high of 18,655 but slipped and closed 58 down at 18,643.
It formed a bullish candle on the daily charts as the closing was higher than the opening level. The index is expected to end the current consolidation soon and may resume its upward journey towards earlier swing highs, with crucial supports at 18,600-18,500 levels, experts said.
“Channel study shows that the index has reached near lower end of rising channel on the hourly as well as daily chart. Thus, this is a high probability level for the index to start the next leg on the upside. Initial resistance zone is at 18,700-18,730,” Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas said.
The Nifty is expected to surpass the recent high of 18,888 and target 19,000 in the short term, he said. This bullish stance would be reversed if the index slips below 18,500 on a closing basis, the market expert said.
On the options front, the maximum Call open interest remained at 19,000 strike followed by 20,000 strike, with Call writing at 18,700 strike then 18,600 and 18,800 strikes.
On the Put side, the maximum open interest was at 18,000 strike, followed by 18,500 strike, with Put writing at 18,700 strike, then 18,600 & 18,500 strikes.
The data shows that the near-term trading range for the Nifty will be 18,500-19,000.
The volatility index India VIX rose to 14.04 levels, up 2.25 percent, but as long as it stays below 20, the bulls are likely to continue supporting the market, experts said.
Banking index
The Bank Nifty, too, started lower at 43,094 and remained under pressure throughout the session to hit the day’s low of 43,076.
The banking index ended at 43,139, down 194 points and formed a Doji pattern on the daily charts ahead of the RBI policy decision.
The Doji pattern indicates indecisiveness among bulls and bears about the future.
“The index is stuck in a broad range between 42,800 and 43,500 and a break on either side post the event will witness some trending moves,” Kunal Shah, Senior Technical Analyst at LKP Securities said, referring to the RBI’s rate announcement.
The undertone remains bullish and if it holds long positions, the level of 42,800 should act as a strict stop loss. A break above 43,500 will trigger a sharp short covering move towards 44,200-44,500 levels, he said.
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