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The Nifty50 has extended the uptrend for the second consecutive session and given a decisive close above 50 DEMA (Day Exponential Moving Average – around 18,100) with above average volumes, forming a decent bullish candle on the daily charts, making higher high higher low formation for the fourth consecutive session on January 18.
It also moved above 21 DEMA (placed around 18,080) while taking support at 9 DEMA (18,020). Hence if the index sustains these levels in coming sessions, then the next level to watch out for on the higher side would be 18,200-18,250 or around the previous swing highs, followed by 18,300-18,500, with crucial support in the near term at 18,000 and then 17,900 levels, experts said.
The Nifty50 had a gap-up opening at 18,074 and after initial volatility, extended the uptrend as the day progressed to hit an intraday high of 18,184. The index closed at 18,165, up 112 points.
The rally was supported by metal, banking and financial services, pharma, select FMCG and IT stocks.
“On the technical aspect, the index has soared over all the major exponential moving averages on the daily chart, construing a positive development. However, the current placement at the sloping trendline could be seen as the last hurdle to overcome, and any breakout above 18,200 could trigger a fresh round of longs in the system,” Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One said.
As far as levels are concerned, he feels 18,050-18,100 is likely to cushion any fall in the index, followed by the sacrosanct support of the 18,000 mark.
On the flip side, an authoritative move beyond 18,200-18,250 is needed to affirm the bullish trend, and then we may expect 18,400-18,500 in a comparable period, the market expert observed.
The declining volatility has also given comfort to bulls. India VIX, the fear index, was down by 1.49 percent from 14.59 to 14.37 levels.
The Option data also indicated that the next resistance area could be 18,200-18,300, with support at 18,000-17,900 levels.
On Option front, weekly maximum Call open interest was seen at 18,300 strike followed by 18,200 strike, with Call writing at 18,300 strike and then 18,350 strike, whereas the maximum Put open interest was seen at 18,000 strike followed by 17,900 strike, with meaningful Put writing at 18,100 strike and then 18,000 strike.
The Bank Nifty opened positive at 42,272 and moved in the positive direction but is overall underperforming the broader market from the last three sessions. It touched an intraday high of 42,556 and closed with gains of 223 points at 42,458.
The banking index has formed a bullish candle on the daily scale with a higher high higher low formation and has seen good buying interest near to 42,100 level. Overall, it has been moving within the band of Mother Candle generated on January 10. Hence overall, it needs to give a strong closing above 42,700 level for further upside over 43,000 mark, experts said.
“It has to hold above 42,222 level for an upmove towards 42,750 and 43,000 levels, whereas supports are placed at 42,222 then 42,000 levels,” Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.
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