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Technical View | Momentum picks up, Nifty closing in on 18,000

If the Nifty manages to defend the day's low of 17,833 in the coming session, it can move towards 18,114, experts said

August 17, 2022 / 05:29 PM IST

The Nifty continued to gain for the seventh successive session and closed in on the psychologically vital 18,000 mark on August 17 even as the Sensex closed above 60,000 for the first time after April 5.

All sectors, barring auto, participated in the rally. The information technology sector emerged as the biggest gainer closing more than a percent higher.

The Nifty, which closed 119 points higher at 17,944, formed a bullish candlestick on the daily charts.

"Momentum seems to have picked up again, after preceding three trading sessions during which narrow intraday ranges with indecisive formations were witnessed, as the Nifty registered a somewhat decent bullish candle with a trading range of 132 points," Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.

If it manages to defend the day’s low of 17,833 in the coming session, the index may move towards 18,000 and then the previous swing high of 18,114 (April 4), experts said.

Close

Intraday weakness is seen below 17,833, with initial targets placed at 17,764 and 17,724, he said.

Also read: Taking Stock: Sensex reclaims Mt 60k, Nifty above 17,900; IT, PSU banks shine

Traders should be cautious about creating fresh long positions, as some momentum oscillators on daily and weekly charts are in overbought zones, Mohammad said.

The market breadth also seems to be gradually improving, as about five shares advanced against three declining shares. The Nifty midcap 100 and smallcap 100 indices gained nearly half a percent each.

Lower volatility is giving comfort to the market. India VIX, the indicator of expected volatility over the next 30 days, was down 0.04 percent at 17.68 levels.

Also read: India Inc banks on strong domestic demand to keep earnings momentum intact

On the options front, maximum Call open interest was seen at 18,000 strike followed by 18,500 strike, while maximum Put open interest was seen at 17,500 strike followed by 17,600 strike.

Call writing was seen at 18,100 strike then 18,400 strike, while Put writing was seen at 17,900 strike then 17,800 strike.

The data indicates that in the immediate term, the Nifty may trade in the 17,700-18,100 range, while the broader range could be 17,500-18,300.

Also read: FPI stock holding slips 14% to $523 billion in June quarter: Report

The Bank Nifty opened gap up by 110 points at 39,351 and kept moving north. The index closed 222 points higher at 39,462, the best closing since November 4.

The banking index formed a small-bodied bullish candle on the daily scale with a longer lower shadow. It formed higher highs for the sixth session.

It has to hold above 39,250 for an up move towards 39,750 and 40,000, while supports are at 39,000 and 38,888, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Disclaimer: The views and investment tips expressed by 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.
Sunil Shankar Matkar
first published: Aug 17, 2022 05:29 pm
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