The Nifty50 maintained its upward march for yet another session and closed with a gain of more than 100 points on March 6, as most of the sectors barring PSU banks & realty joined the rally.
The index saw a strong gap up opening at 17,680 and hit an intraday high of 17,800, but there was some profit taking in later part of the session, which resulted in to around 90 points loss from the day’s high. Finally, the index settled with 117 points gains at 17,712, with above average volumes, and formed small bodied bullish candle which somewhat resembles Shooting Star kind of pattern formation on the daily charts, but maintained higher highs higher lows formation for the second consecutive session.
A Shooting Star pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. The pattern is usually formed in an uptrend and is treated as a reversal pattern but requires confirmation.
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For coming sessions, 17,800 is expected to be a crucial level for the Nifty50 for further upside towards psychological 18,000 mark, with support at 17,300-17,500 area, experts said.
With Monday’s rally, the Nifty50 closed above downward sloping resistance trendline adjoining highs of December 1 last year and January 24, 2023. Further it has maintained above 200-day EMA (exponential moving average – 17,582), with momentum indicator RSI (relative strength index) above 50, which all are supporting factors.
“On the daily chart, the Nifty closed within the falling channel following an intraday breakout from the said channel. On the daily chart, a Shooting Star kind of candlestick pattern has formed, suggesting a bearish reversal,” said Rupak De, Senior Technical Analyst at LKP Securities.
Hence, he feels a fall below 17,650 may trigger a steep correction in the market. While a sustained trade above 17.750 may induce buying in the market, he said.
On the weekly Option front, the maximum Call open interest was seen at 17,800 strike followed by 18,000 strike, with Call writing at 17,800 strike then 17,950 strike. However, we have seen maximum Put open interest at 17,500 strike followed by 17,600 strike, with Put writing at 17,700 strike then 17,600 strike.
The above Option data suggested that the Nifty may trade in the range of 17,550 to 17,850 levels in near term.
Bank Nifty opened on a positive note at 41,418 and extended its momentum towards 41,671 levels in the initial hour of the session. However, it failed to hold at higher zones and gradually drifted lower to hit an intraday low of 41,259 in latter part of the trading day but did not slip into red.
The banking index has formed a small bodied bearish candle on daily scale as it closed slightly below its opening levels. However, it still formed higher highs on daily scale from past seven trading sessions and closed near 50 DEMA (41,374), with 99 points gains at 41,350.
“Now, it has to hold above 41,250 levels to make an up move towards 41,750-42,000 area, whereas on the downside support is expected at 41,000 then 40,750 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
Volatility slightly increased for the day but overall it has been cooling off from the last few sessions and paving way for bulls at support zones. India VIX, the fear index, rose by 0.71 percent from 12.18 to 12.27 levels.
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