The Nifty50 recouped its previous day’s losses to close above the vital 18,400 mark on December 19, driven by short covering and optimism in European counterparts. Auto, FMCG, metal, select banking & financial services stocks aided the rally.
The index opened higher at 18,288 and after initial volatility, gained strength to trade higher for the rest of the session and rose to the day’s high of 18,432. It closed 151 points down at 18,420.
The index formed a bullish candle on the daily charts, taking support at 18,250 level. It formed lower highs lower lows for the third straight session, indicating that the mood hadn’t completely changed to bullish.
“The Nifty found support near 18,250 and reversed sharply thereafter. However, the short-term formation is still on the negative side,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
As long as the index holds 18,300, a pullback rally is possible and the index can move to 18,550-18,575 or the 20-day simple moving average (SMA), placed at 18,541.
Below 18,300, the uptrend will be vulnerable and the index can slip to 18,200-18,150, the market expert said.
The options data indicates that the Nifty can trade in the 18,200- 18,600 range in the near term. We have seen maximum Call open interest at 19,000 strike followed by 18,700 strike with Call writing at 18,500 strike then 18,300 strike.
The maximum Put open interest was at 18,000 strike followed by 18,300 strike, with Put writing at 18,300 strike then 18,000 strike.
The volatility index India VIX was down by 3.67 percent from 14.07 to 13.55 levels after the recent spike, giving comfort to bulls.
Banking index
The Bank Nifty opened higher at 43,346 but immediately wiped out gains to slip to the day’s low of 43,110. In a volatile trade, it recovered to hit the day’s high of 43,451.
The banking index underperformed the equity benchmarks and closed 194 points higher at 43,414, forming a small-bodied bullish candle on the daily charts.
“The index has to hold above 43,339 level to make an up move towards 43,750 and 44,000 levels, whereas supports are placed at 43,250 and 43,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
The broader markets also traded higher, with the Nifty Midcap 100 and Smallcap 100 indices rising half a percent each. The breadth was positive, as about three shares advanced for every two declining shares on the National Stock Exchange.
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