After a day of flat trade, the Nifty50 on May 10 managed to gain strength and closed above the 18,300 mark for the first time since December last year, though it was yet another volatile session as traders look cautious ahead of US inflation data due tonight. Select banking & financial services, auto, FMCG and oil & gas stocks supported the market.
The index opened above the 18,300 mark, but lost all those gains in an initial hour of trade and hit a day's low of 18,212. It showed good recovery amid volatility and finally ended the session at 18,315, the highest closing level since December 20 last year, up 49 points.
The Nifty50 has formed a Dragonfly Doji kind of pattern on the daily charts as the closing was similar to opening levels, indicating indecisiveness among bulls and bears, but gradually gaining strength, taking crucial support of 18,000 mark.
Now the support seems to have shifted higher to 18,200. If the index holds the same in coming sessions, then 18,500 can't be ruled out, experts said.
Momentum indicator RSI (relative strength index) on Daily time frame is in sync with price trend reflecting the presence of positive momentum.
"The next strong resistance level for the Nifty is expected to be in the range of 18,400 to 18,500," Rupak De, Senior Technical Analyst at LKP Securities said.
He feels the overall trend remains positive, indicating that there is an overall upward bias in the market. Therefore, despite potential resistance levels, the market is still expected to move in an upward direction as long as it sustains above 18,200, he said.
Vidnyan Sawant, AVP - Technical Research at GEPL Capital also said the traders should Expect the prices to move higher until 18,400 followed by 18,500.
The weekly Option data also indicated that 18,500-18,400, which enjoys maximum Call open interest, is also likely to be the key resistance area for the Nifty50. The meaningful Call writing was also seen at similar levels.
On the Put side, 18,200 strike has maximum open interest, followed by 18,300 strike, which both can act as a near-term support for the index. Even meaningful Put writing was seen at similar levels.
Bank Nifty continued to hold the 43,000 mark, rising 133 points to close at 43,331 after hitting an intraday high of 43,384 and a low of 42,822. The index has formed a small- bodied bullish candle with a long lower shadow and a small upper shadow on the daily scale.
"The support level at 43,000 demonstrated a strong demand zone. Currently, there is immediate resistance at 43,500, and surpassing this level would clear the way for further gains toward 44,000," Kunal Shah, Senior Technical & Derivatives Analyst at LKP Securities said.
The volatility also increased for the fourth straight session, with the India VIX closing above the 13 mark for the first time since March this year. If it consistently increases, then bulls might lose momentum. India VIX, which measures the expected volatility in the next 30 days for Nifty, rose by 3.19 percent to 13.08 levels, from 12.68 levels.
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