The Nifty climbed to a week's high on February 3 despite a mixed trend in the global market, driven by buying in banking & financial services, auto, FMCG and information and technology stocks.
The index opened 100 points higher but drifted lower to the day's low of 17,584 but recovered smartly to close end at 17,854, up 244 points or 1.38 percent, the biggest single-day gain since November 11, 2022.
It formed a bullish candle on the daily charts, with a long lower shadow indicating support-based buying. It again defended 200 EMA (exponential moving average - 17,550)
For the week, it gained 250 points, or 1.42 percent, the biggest weekly gains in five weeks, forming a large bullish candlestick pattern.
As long as the index sustains above 17,650, the high of February 2, further pullback rally is possible in the coming sessions, experts said.
"A minor pullback rally is possible if the index trades above 17,650. On the flip side, selling pressure is likely to accelerate only after the dismissal of 17,550 and below the same the index could slip till 17,400," Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities said.
Extended correction can drag the index to the 200-day SMA or 17,300, he said.
On the Option front, the maximum Call open interest was at 18,000 strike, which is expected to be critical resistance area in coming trading sessions, followed by 18,500 and 18,200 strikes, with maximum Call writing between 18,000 and 18,300 strikes.
On the Put side, there was maximum open interest was at 17,600 strike, which can be crucial support area for the Nifty50, followed by 17,700 and 17,500 strikes, with writing at 17,700 strike, then 17,600 and 17,500 stikes.
The data indicates that the Nifty may see a trading range of 17,500-18,200 for the coming session.
Volatility cooled further to below 15, giving more comfort to bulls. India VIX, the fear index, fell 8.48 percent to 14.4 level.
During the week, it was down 26 percent.
Banking index
The Bank Nifty played a crucial role in the rally, trading high throughout the session. The index closed 830 points, or 2 percent, higher at 41,500, the crucial resistance area, forming a bullish candle on the daily charts.
The next level to watch would be 50 EMA (42,000) and 21 EMA (41,725), with support at 39,761, the low of February 2.
"The index's immediate support on the downside stands at the 41,000-40,800 zone, and one should keep a buy-on-dips approach," Kunal Shah, Senior Technical and Derivative analyst at LKP Securities said.
The upside hurdle continues to be 42,000, where the highest open interest is built up on the Call side.
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