Technical View | Nifty form long bullish candle, experts say recovery may extend to 18,300

The Nifty rebounded sharply on January 9 after taking a beating in the previous three sessions to climb above 18,100, led by short-covering as well as positive global cues.

The index opened higher at 17,953 and traded positive throughout the session to hit an intraday high of 18,141. The index closed at 18,101, up 242 points, or 1.35 percent, higher, recouping the previous week’s losses.

The index formed a long bullish candlestick on the daily charts, with a higher high and a higher low formation. It took support at the upward sloping support trend line adjoining June 20 and December 26, 2022. The 100-day exponential moving average (EMA) placed at 17,890 acted as healthy support for the index.

If the index closes and sustains above the 50-day EMA (18,142) as well as 18,200, it can rise to 18,500, the crucial resistance area. Support is at 18,000 followed by 17,750, experts said.

Technology, banking & financial services, auto, FMCG and metal were the leading gainers among sectors.

“Despite the recovery, markets may remain choppy as most of the lingering worries are yet to subside. Technically, a strong bullish candle on daily charts and promising reversal formation is indicating further uptrend from the current levels,” Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said.

The level of 18,000 will be the sacrosanct support zone, and above it, the index can climb to 18,200-18,270.

The uptrend, however, will be vulnerable if the index slips below 18,000. The Nifty can slide to 17,950-17,900, the market expert said.

The options day shows that the expected range for the Nifty shifted a bit higher to 17,700-18,400 after the rally.

On the options front, the maximum Call open interest was at 18,300 strike followed by 18,200 strike, with Call writing at 18,300 strike, while the maximum Put open interest was at 18,000 strike followed by 17,800 strike, with meaningful Put writing at 18,000 strike then 18,100 strike.

The volatility index India VIX was down 2.47 percent to 14.65, giving comfort to the bulls.

Banking index

The Bank Nifty opened positive at 42,405 and moved in up in the first half followed by some muted moves. It closed 394 points higher at 42,583.

The banking index formed a bullish candle on the daily scale and negated its lower lows formation of the last three sessions. It has to hold above 42,500 to move towards 42,750 and 43,000, while supports are placed at 42,250 and 42,000, Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.

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