Technical View | Nifty forms bullish candle, sharp uptrend likely on a decisive close above 17,700

The Nifty ended higher despite nervousness among global counterparts as all sectors participated in the run, with banking & financial services and metal emerging as the top gainers on September 5.

The index closed 126 points higher at 17,666 and formed a bullish candle on the daily charts. The index is closing in on the crucial 17,700 mark, which if decisively surpasses can take the Nifty to 17,850 and then 18,000, with the 17,500-17,300 support area, experts said.

"If we take a glance at the daily time frame chart, we can see the index reaching the crucial trend line resistance level of 17,700. A small push from the global markets would certainly provide the much-needed impetus to the breakout from the recent congestion phase," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One said.

After this, "we will not be surprised to see the index hastening towards 17,850 and then even towards the psychological mark of 18,000”.

On the flip side, 17,540–17,460 should now provide some cushion against small intraday declines, he added.

The market expert advised traders to focus on individual stocks because some of the themes from the broader market are gearing up for strong moves in the near term.

The broader market also moved in line with the benchmark. Nifty midcap 100 and smallcap 100 indices gained 0.4 percent and 1.2 percent, respectively.

The volatility index India VIX rose 0.57 percent to 19.66 levels, which, experts said, should stay below 18 levels for the market to move towards its recent highs.

On the options front, the maximum Call open interest was seen at 18,000 strike followed by 18,500 strike, with Call writing at 17,700 strike then 18,700 strike, while the maximum Put open interest was seen at 16,500 strike followed by 17,500 & 17,000 strike with Put writing at 17,000 strike, then 16,400 strike.

The data indicates that the Nifty can trade in the 17,500-18,000 range in the immediate term, while 17,000-18,000 could be the broader range.

Banking index

The Bank Nifty opened flat at 39,412 and gained strength as the day progressed to hit a high of 39,865, providing support to the benchmark Nifty.

The banking index closed 385 points higher at 39,806 and formed a bullish candle on the daily charts.

"The index is trading in a strong uptrend with higher top and had higher bottom formations intact on all the time frames. The index once surpasses the mentioned hurdle will see a strong move on the upside towards 41,000-41,500 zone," Kunal Shah, Senior Technical Analyst at LKP Securities said.

At the lower end, support stands at the 38,800-38,500 zone, where fresh Put writing has been observed, he said.

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