Technical View | Nifty forms big bullish candle; experts say consider long positions above 16,832

The Nifty50 saw a relief rally on January 25 as it bounced back after breaking 17,000 in the initial selloff that raised fears of the index closing in the red for the sixth session.

After a gap-down opening, the Nifty made a smart come back and turned positive in the first hour only to swing between gains and losses as the day progressed. The index closed 128.90 points, or 0.75 percent, higher at 17,278.

"This intraday recovery of around 450 points, appears to have halted the correction for the time being. Hence, sustaining above 16,836 levels, a sideways consolidation move in the zone of 17,600–16,800 can be expected," said Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory at Chartviewindia.

The trend for the next session, on January 27, can be influenced by factors like F&O monthly expiry and the outcome of the Federal Reserve meeting.

"Hence, it looks prudent to remain neutral for the day and if the Nifty sustains above 16,832 levels post-Thursday, then long positions can be considered for a target of 17,600 levels, where as a close below 16,800 can pave the way to test of 16,410 levels," Mohammad said.

The Nifty formed a big bullish candle on the daily scale but formed lower lows for a sixth straight session.

"Now it has to hold above 17,250 zones to negate the negative price formation of lower highs and to start the next leg of bounce towards 17,500 and 17,777 zones whereas support exists at 17000 and 16850 zones,"  said Chandan Taparia, Head-Technical & Derivatives Research, Motilal Oswal

On the options front, the monthly series’ Maximum Call OI is at 18,000 then 17,500 strike, while Maximum Put OI is at 17,000 followed by 16,500 strike.

Call writing is seen at 17,500 and 17,400 strike, while marginal Put writing is seen at 17,200 then 17,100 strike. Options data suggests a wider trading range between 16,800 and 17,700, while teh immediate trading range is between 17,000 and 17500 zones.

India VIX, a measure of volatility, was down by 6.42 percent from 22.82 to 21.35 levels.

Bank Nifty

The Bank Nifty opened negative but respected its previous day’s low of 36,375. It witnessed a good recovery from lower zones and closed 760 points higher.

It formed a bullish Engulfing candle on the daily scale, as it reclaimed the lost ground and negated its lower low formation of the last five sessions.

"Now, it has to hold above the 37,500 zone for an up move towards 38,250 and 38,500, whereas support can be seen at 37250 and 37000 levels”, Taparia said.

On the stock front, a bullish setup was seen in Maruti, Bank Baroda, Axis Bank, Bandhan Bank, Bata India, Federal Bank, Tata Power, SBIN, Cummins India, PVR, City Union Bank, SRF, Power Grid, Tata Motors, Bharti Airtel, Hero MotoCorp, Bajaj Auto, AU Small Finance Bank, Aditya Birla Fashion & Retail, NTPC and Cipla. Weakness was seen in IndiaMart, Ramco Cement, Motilal Oswal Financial Services, ICICI Prudential and Granules, Taparia added.

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