The Nifty50 continued its northward journey for the second consecutive session and formed a bullish candle on the daily charts by making a higher high and higher low on January 3, indicating positive consolidation. Banking and financial services, technology, and healthcare stocks led the market higher.
In the coming session, if the index decisively crosses the 18,250 level taking good support at 18,150, then 18,300-18,400 can be a possibility as the volatility also cooled down further, experts have said. Also, the index has seen a breakout of the downward sloping resistance trend line adjoining December 1 record high of 18,887, December 22 and December 30, 2022, indicating a positive sentiment.
The Nifty50 opened lower at 18,163 and showed recovery to trade higher in the morning trade itself. At noon, the index lost all those gains but recouped all the losses in the last couple of hours of trade to hit a day's high of 18,252 and closed with 35 points gain at 18,232.
"Positive consolidation formation on daily charts and higher bottom formation on intraday charts are indicating the continuation of an uptrend wave in the near future," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
For traders, 18,150 would be the trend decider level, above which, the index could rally till 18,300-18,350, Chouhan stated.
On the flip side, the market expert said that below 18,150 uptrend would be vulnerable, and below the same, the index could slip to 18,050-18,025.
On the Option front, maximum Call open interest was seen at 19,000 strike, which is expected to be a key hurdle for the Nifty50, followed by 18,500 strike and 18,200 strike, with Call writing at 18,200 strike, and then 18,500 strike.
On the Put side, the maximum open interest was seen at 18,000 strike, which is likely to be critical support for the index, followed by 17,500 strike, with writing at 18,200 strike and then 17,500 strike.
The above Option data indicated that 18,200 seems to be key to the level, as holding of which for coming sessions can take the Nifty up to 18,500. Overall the trading range is expected to remain at 18,000-18,500 levels for coming sessions.
The volatility index India VIX fell by 2.34 percent to 14.39 level, from 14.69, making the trend more favourable for bulls.
The Bank Nifty opened in negative terrain at 43,151 and showed Nifty50-like movement. The banking index hit an intraday high of 43,483 in the afternoon and finally settled with 222 points gains at 43,425.
Overall it remained above 43,000 mark throughout the session and formed a bullish candle on the daily charts with higher high higher low formation.
"The Bank Nifty bulls continued buying from the lower levels and the index is near a breakout level of 43,600. The momentum indicator RSI (relative strength index) is in the strong buy zone which confirms the strength of the index," Kunal Shah, Senior Technical Analyst at LKP Securities said.
The lower-end support is visible at 43,000 where the highest open interest is built up on the Put side and the upside resistance is at 44,000 where the aggressive Call writing has been observed, the market expert added.
The broader markets maintained an upward direction with the Nifty Midcap 100 and Smallcap 100 indices gaining more than 0.2 percent each.
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