The Nifty50, after significant volatility in the early hour of trade, gained momentum and reclaimed the 18,100 mark on December 27, continuing the uptrend for the second consecutive session due to value buying in quality stocks after a recent correction.
The index has formed a bullish candle on the daily charts with a long lower shadow indicating support-based buying from the lower level, with a higher high formation. Hence, if the index sustains above 18,100 then an 18,200 or a 50-day simple moving average (DMA or SMA) could be the next target followed by 18,300, with a crucial support area of 17,900-18,000, experts said.
The momentum oscillator RSI (relative strength index) at 45 level on a daily scale and 56 level on weekly charts also showed an uptrend, indicating some more upside in coming sessions.
The Nifty50 opened higher at 18,090 and corrected up to 17,967, but after an initial hour of up and down, the index gained momentum and climbed up to 18,149. It finally settled with 118 points gains at 18,132 ahead of the monthly F&O expiry scheduled for coming Thursday.
“After a promising reversal formation, the market held the uptrend formation throughout the day. The higher bottom intraday formation is indicating the continuation of a pullback rally in the near future,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
For the trend-following traders, he feels 18,000 would act as a sacrosanct support level, above which the index could move up to a 50-day SMA (simple moving average) or 18,220. In case of any further upside, the index could move up to 18,300, he said.
Option data indicated the expected trading range for the Nifty50 for coming sessions, has been shifted higher to 17,800-18,300 levels, from 17,800-18,200 levels earlier.
On the Option front, we have seen maximum Call open interest at 18,200 strike followed by 18,500 strike, with Call writing at an 18,350 strike and then 18,150 strike. On the Put side, the maximum Put open interest was seen at 18,000 strike followed by 17,800 strike, with writing at 18,000 strike then 18,100 strike.
India VIX was down further, by 4.03 percent from 15.93 to 15.29 levels, making the trend favourable for bulls and helping them to buy declines.
Bank Nifty opened positive at 42,828 and after early declines, it managed to hold the 42,400 level and headed higher to hit a day’s high of 42,927. The banking index closed with gains of 229 points at 42,860 and formed a Doji kind of pattern on the daily charts, indicating a bit of indecisiveness among buyers and sellers about future market trends.
With the uptrend for the second straight session, the supports have shifted higher. Now it has to hold above the 42,750 level to make an up move towards 43,250 and 43,500 whereas on the downside, support is placed at 42,500 and 42,250 levels, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
The broader markets continued to perform better than benchmarks for a second consecutive session on strong breadth. About four shares advanced for every declining share on the NSE. The Nifty Midcap 100 and Smallcap 100 indices rose around 1 percent each.
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