A mid-session recovery helped the Nifty continue close higher for a second successive day on March 17, helped by rally in global counterparts and banking & financial services, technology and metal names.
The index opened higher at 17,112 and hit an intraday high of 17,146 in initial hours but failed to hold on to the gains. The index slipped to 16,958 halfway through the session but recouped losses to close 114 points higher at 17,100.
It form a Long Legged Doji pattern for the second day, indicating the possibility of bottom formation after the recent sharp correction.
The Nifty formed higher highs and higher lows, with above-average volumes for yet another session, indicating the possibility of a further upside.
The next resistance levels to watch could be 17,300-17,350, followed by 17,450, which coincides with the 200-day simple moving average. The level of 16,950-16,850 can act as a crucial support, a break of which can drag the index to 16,750, experts said.
"We observe back-to-back Doji patterns in the last two sessions. The current market action suggests that the market is in the process of near-term bottom formation," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
On the weekly charts, the Nifty formed a long bearish candle with a lower shadow, indicating buying at lower levels. It was down 1.8 percent for the week.
"The swing low of Thursday at 16,850 could be considered as a new lower bottom of the sequence. One may expect the Nifty to move up from here towards the next overhead resistance of 17,300-17,350 levels by next week. Immediate support is at 16,950 levels," Nagaraj said.
According to the weekly options data, the maximum Call open interest was at 17,800 strike, followed by 17,500 strike, with Call writing at 17,200 strike then 17,100 and 17,300 strikes.
On the Put side, the maximum open interest was at 17,000 strike, followed by 17,100 strike, with writing at 17,100 strike, then 17,000 and 16,800 strikes.
The data indicates that the Nifty will likely see a trading range of 16,800-17,300.
Banking index
The Bank Nifty made a decent recovery in the last hour of trade to close the session at 39,598, up 465 points or 1.2 percent.
The index formed a Hammer candlestick pattern on the daily charts, which is generally a bullish reversal pattern. Hence, 38,600 can be crucial support and if it gets broken, there could be a sharp correction, experts said.
"It has to hold above 39,400 levels to extend the bounce towards 40,000 then 40,250 levels, whereas on the downside, support exists at 39,200, then 38,888 levels," Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.
Volatility fell sharply. India VIX, the fear index, plunged 8.94 percent from 16.22 to 14.77 levels.
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