The Nifty50 has extended its northward journey for the fourth consecutive session and formed a long bullish candlestick pattern on the daily charts on April 5, as traders looked positive ahead of the outcome of the Monetary Policy Committee meeting, to be announced tomorrow.
The index opened higher at 17,422, and remained in an uptrend throughout trade to hit a day's high of 17,571. Finally the index decisively closed above its 200-day EMA (exponential moving average - 17,514) as well as 200-day SMA (simple moving average - 17,500), which is a positive sign. It rallied 159 points or 0.91 percent to 17,557.
Hence, if the index sustains above 200-day EMA in coming sessions, then the next crucial resistance area may be 17,600-17,800, which ultimately may open doors for the psychological 18,000 mark, with crucial support at 17,300-17,000 zone, experts said.
"On the daily chart, the Nifty has given a falling channel breakout. Besides, the index has moved above the critical 200 DMA after several days, suggesting increasing bullishness," Rupak De, Senior Technical Analyst at LKP Securities said.
The momentum oscillator RSI (relative strength index) is in bullish crossover and rising, which suggests positive momentum for the near term. On the higher end, the index may move towards 17,800, and the current uptrend may remain in force until the Nifty falls below 17,350, he said.
On the Option front, we have seen the maximum Call Open interest at 17,700 strike, followed by 17,600 strike and 17,800 strike, with Call writing at 17,700 strike, then 17,800 and 17,600 strikes, which indicated that these levels could be crucial resistance areas for the Nifty50 in coming sessions.
On the Put side, 17,500 strike has seen the maximum open interest, followed by 17,400 & 17,300 strikes, with writing at similar strikes in the same flow, indicating the crucial support zone for the index.
"Even though the highest Call open interest is only at 17,700, there is a congestion zone in the Nifty between 17,600 and 17,900 where it should take a pause before deciding its next course of direction," Rahul Ghose, Founder & CEO at Hedged said.
According to Ghose, a good play for tomorrow's weekly expiry for traders would be to take the 17,500 short straddle with a 17,600 CE long leg, assuming the index opens around the 17,500 or very close to this level.
This will ensure there is protection on the upside in case of a rally and one can always sell an additional Put or Call depending upon the direction of movement in the first half if required, he said.
Bank Nifty opened on a positive note at 40,972, but remained consolidative and gradually drifted towards 40,800 levels in the first half of the session. Mild buying was seen from its crucial support zone as it extended its move towards 41,071, an intraday high, and managed to close in the positive territory with 186 points gains at 40,999.
The index formed a small-bodied bullish candle on the daily scale with a long lower shadow as buying was visible at lower zones and continued to form higher highs - higher lows for the last four sessions.
"Bank Nifty has to continue to hold above 40,750 levels, to make an up move towards 41,250 and then 41,500 levels, while on the downside, support shifted higher at 40,750 and then 40,500 levels," Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.
India VIX was down by 1.37 percent from 12.59 to 12.41 levels, which further gave comfort to the bulls.
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