Below 12,045, the next big support for Nifty50 is seen at 11,930 levels
After the gap-up opening, the market failed to sustain at higher levels and trended lower to register the third consecutive day of decline on January 22. The Nifty50 finally closed at 12,107 down 0.52 percent for the day.
Broader market indices, BSE Midcap and Smallcap, outperformed the benchmark as they were down 0.32 percent and 0.13 percent, respectively, for the day. The market breadth on NSE was negative with an advance-decline ratio of 9:10.
The Nifty has been in a decline mode since it hit an all-time high of 12,430 in the opening trade on Monday. It has formed another bearish candle and now has immediate support at 12,045 levels.
Below 12,045, the next big support for Nifty50 is seen at 11,930 levels. On the upside 12,230 needs to be crossed for a sustainable bounce towards 12,430 levels.
Overall, the market is likely to trade in a broader range of 12,400-11,950. In Nifty January monthly expiry options, maximum open interest for Put is seen at strike price 12,000 and 11,500; while for Call maximum open interest is seen at 12,500 followed by 12,300.
A significant amount of Call writing was seen at strike price 12,000 and the immediate strikes indicating overhead resistance for the market. The Nifty option distribution is suggesting a range of 12,000 and 12,500.
India VIX closed at 16.36 up by 3.15 percent for the day. VIX has been in an up move since the start of this year as the market is witnessing volatility at all-time high levels. It is likely to persist as Budget approaches next week.
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The stock has formed a major bottoming out formation on the weekly chart between 510-275 odd levels over the last 18 months. Recently, the stock touched an all-time high of 537 and then corrected down towards 471.
Here it has taken support at 89-day exponential moving average and seen a bounce back. Also, it has corrected 61.8% Fibonacci retracement of the last upswing from 435 to 537 levels and showing resumption of the uptrend.
The price has given a breakout on the upside from Bollinger Band with the expansion of bands indicating a continuation of the trend in the direction of the breakout on the daily chart.
It has also crossed 7-weeks highs after consolidating at lower levels. Stochastic has given positive crossover with its average on the daily chart. MACD has moved above the equilibrium level of zero on the daily chart. Thus, the stock can be bought at current levels and on dips towards Rs 597 with a stop loss below 480, and a target of 580 levels.
The stock saw a breakout in early August last year around 12,000 and hit a high of 15,147 in late October. Since then the stock seems to be consolidating its gains between 15,147 and 14,000 odd levels to form a base for the next leg of the rally.
Last week, the stock witnessed a breakout on the upside indicating resumption of the uptrend. For the last few sessions, the stock has been trading in a narrow range to form a bullish pole and flag pattern which is a continuation pattern.
MACD has given positive crossover above the equilibrium level of zero with its average on the weekly chart. Thus, the stock can be bought at current levels and on dips towards 15,400 with a stop loss below 15,100, and a target of 17,000 levels.
The stock touched an all-time high of 36,370 in August’18 and then declined to hit a low of 17,150 in August’19. Here, the stock has taken support at its previous highs and then bounced back.
The stock has consolidated between 26,000 odd and 17,150 levels to form a bullish inverted head and shoulders pattern on a weekly chart over a one-year period.
The right shoulder of the pattern has taken support at 200-Day moving average (DMA) and then bounced back. The stock has seen a strong up move indicated by long body bullish candles on the weekly chart indicating buying participation.
MACD has given positive crossover above the equilibrium level of zero with its average on the weekly chart. Thus, the stock can be bought at current levels and on dips towards 25,100 with a stop loss below 24,400, and a target of 28,500 levels.
(The author is Head of Technical and Derivatives, Sanctum Wealth Management)Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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