Domestic equities rebounded sharply as sentiments improved following the confirmation that the NDA will form the government for the third consecutive term. The Nifty rallied 736 points (3.4 percent) to close at 22,620, returning to last Friday’s level. The broader market also rallied, with the Midcap 100 and Smallcap 100 indices rising by 4.3 percent and 3.8 percent, respectively.
India VIX cooled down by 29.40 percent on an intraday basis, settling at 18.89. The reduced volatility provided comfort to the bulls. The Nifty managed to close above the 50-day moving average, which is around 22,430. With the previous day's high of 23,179.50, the Nifty retraced more than 61.8 percent in yesterday's session.
Call writers (bears) exited their positions, and additional put writing was observed at all strikes from 21,500 to 22,200, leading to the sharp recovery in the Nifty. Strong put writing was noted at the 22,200 and 22,400 strikes in the index.
The Nifty 22,500 level continues to play a crucial role in determining the index's direction.
"The call and put writers fought fiercely at the 22,500 strike, and the option activity at this strike will provide cues about the Nifty’s intraday direction," said Ashwin Ramani, Derivatives & Technical Analyst at SAMCO Securities.
"We anticipate large swings in the coming sessions. A slip below 22,400 could trigger a short-term sell-off, while sustaining above 22,680 would likely resume the uptrend," he added.
Brokerage house Prabhudas Lilladher noted, "The index would have the support zone near the low made around 21,800 levels, and on the upside, a decisive breach above the 22,900 zone shall further improve the bias and sentiment."
The momentum indicator, RSI, is just above the 50 mark, indicating neutral momentum.
"We anticipate that the Nifty will remain volatile within the range of 21,700 to 23,000. The optimal trading strategy in this range-bound market is to buy at the support zone and sell at the resistance level," said Vidnyan S. Sawant, Head of Research at GEPL Capital.
Bank Nifty
After the 2024 Lok Sabha election results, the Bank Nifty tumbled around 5,000 points from its record high of 51,133, marking a decline of approximately 10 percent. Despite this, a sharp bounce back from lower levels to 49,362 was observed, and it is currently sustaining above its 20-day SMA.
Additionally, the RSI indicator is hovering near the 50 mark, indicating neutral momentum.
The 47,000, 47,500, and 48,000 strikes saw call writers (bears) exiting their positions and additional put writing, leading to a strong recovery in the index. Call writers (bears) hold sizeable positions at the 49,500 strike, and the option activity at this strike will provide cues about Bank Nifty’s future direction.
"We anticipate that Bank Nifty will trade within a range of 47,500 to 50,000 in the short term, with key resistance at 50,000–51,100 and key support at 47,500–46,000. Buy Bank Nifty on dips till 48,000 for a target of 50,000, with a stop loss at 47,500," said Sawant.
The index formed a bullish inside bar on the daily timeframe and concluded above its 20-day and 50-day moving averages.
"On the hourly chart, support is indicated at 47,300 levels, while resistance is placed at 49,650, followed by 50,050. A pullback towards the 48,500 zone presents a good buying opportunity for short-term traders," said Om Mehra, Technical Analyst at SAMCO Securities.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
