The Nifty snapped a three-day losing streak to close higher on January 13 on easing inflation, a rise in growth numbers and impressive December quarter numbers from IT companies. FII outflows, however, capped the upside.
The index traded lower in the morning but recovered to hit the intraday high of 17,999 in the afternoon. It closed 98 points higher at 17,957, supported by banking & financial services, auto, technology and metal stocks.
It formed a bullish candlestick pattern on the daily charts. The index ended half a percent higher for the week as well and made a Long Legged Doji pattern on the weekly timeframe, indicating indecisiveness among buyers and sellers about the market trend.
For the coming sessions, 17,900 is expected to be the sacrosanct support followed by crucial support of 17,800, while 18,000-18,200 will act as resistance, experts said.
“For the next few trading sessions, the 100-day SMA (simple moving average), or 17,900, would act as sacrosanct support levels. A pullback formation above the same can drive the index to 20-day SMA or 18,075,” Amol Athawale, Deputy Vice President-Technical Research, Kotak Securities, said. A further upside can take the index to 18,200.
A fresh round of selling is possible if the Nifty slips below 17,800 and it can drop to 17,650-17,600, the market expert said.
On the weekly options front, the maximum Call open interest was at 17,900 strike followed by 19,000 strike and 18,000 strike, with Call writing at 18,200 strike then 18,300 strike.
The maximum Put open interest was at 17,900 strike followed by 17,800 strike, with Put writing at 17,900 strike then 17,800 strike.
The data also indicates that the Nifty is likely to mve in the 17,700-18 range.
India VIX, the fear index, was down by 5.33 percent from 15.28 to 14.46, giving comfort to the bulls.
Banking index
Bank Nifty also gained strength in late-morning deals and touched an intraday high of 42,454. It closed at 42,371, up 289 points, and formed a bullish candle on the daily charts with a long lower shadow, indicating support-based buying, with a higher high higher low formation for the second straight session.
“The Bank Nifty bulls managed to hold the support level of 41,700 on the downside, and the index moved higher throughout the day. The bulls, however, to reclaim full control, will have to surpass the level of 43,000 on a continuing basis,” Kunal Shah, Senior Technical Analyst at LKP Securities said.
The undertone remains bullish. Traders should continue to buy on dips as long as the index stays above 41,700, he said.
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