The Nifty50 wiped out all its previous day’s gains, falling half a percent on December 30, the last day of the year 2022, and formed a long bearish candle which resembles a Bearish Piercing kind of pattern on the daily charts, indicating some kind of nervousness. In fact, it was a weak start to the January series.
But the weekly scale presented a different scenario. The index recouped more than half of its previous week’s losses and formed a bullish candle which looked like a Bullish Harami kind of pattern formation on the weekly frame, indicating a bullish reversal sign after back-to-back losses in the previous three consecutive weeks. Even the momentum oscillator RSI-14 (relative strength index) is at 56 level on the weekly scale, indicating the positive momentum in prices, experts said.
The index opened above the 50-day SMA or simple moving average of 18,250 at 18,259 but lost all the momentum in late trade to hit a day’s low of 18,080. The index has defended 18,100 and closed 86 points lower at 18,105 on Friday, but gained 1.7 percent for the week after taking support at 17,780 level.
A bullish Harami pattern is formed at the bottom of a downtrend or near a significant support zone. This pattern is made up of two candlesticks.
“The benchmark Nifty recovered smartly during the week, pairing more than 50 percent of the previous week’s loss. The index has formed a Bullish Harami pattern on the weekly chart, suggesting a bullish reversal,” Rupak De, Senior Technical Analyst at LKP Securities said.
He feels that the trend for the short term is likely to remain bullish as long as it remains above 17,800 on a closing basis.
“On the higher end, resistance is visible at 18,350. A decisive move above 18,350 may induce a further rally towards 18,600-19,000. On the other hand, a decisive fall below 17,800 may weaken the trend,” the market expert said.
On the Option front (next weekly expiry), we have seen maximum Call open interest at 18,200 strike, indicating near term resistance for the Nifty50, followed by 18,300 strike & 18,500 strike, with Call writing at 18,200 strike, then 18,300 strike.
On the Put side, the maximum open interest was seen at 18,000 strike, which is expected to be crucial support for the index, followed by 17,500 strike, with writing at 18,200 strike then 17,800 strike.
The above Option data indicated that the Nifty50 may trade in the range of 17,800-18,300 levels in the coming days.
India VIX was up by 0.37 percent from 14.81 to 14.87 levels. Volatility was slightly up but recently cooled down below the 15 mark and needs to hold below the 14 mark for a smoother market ride.
The Bank Nifty opened positive at 43,402, but failed to cross its previous day’s higher zone and moved in a range of around 600 points throughout the day. It closed with losses of around 266 points at 42m986 and negated its higher highs from the last four sessions.
The banking index formed a Bearish candle on the daily scale with a longer lower shadow indicating some support-based buying, while it formed a bullish candle on the weekly frame.
The index has to cross and hold above the 43,034 level for an up move towards 43,250 and 43,500 levels, whereas on the downside, support is placed at 42,750 and 42,500 levels, according to Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
However, the broader markets had a different mood on Friday, outperforming frontliners. The Nifty Midcap 50, Midcap 100 and Smallcap 100 indices gained 0.5-0.75 percent on positive breadth.
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