Technical View | Nifty gains momentum, experts say next hurdle at 19,600

Momentum continues for yet another session in Nifty50, Bank Nifty

The Nifty extended gains for the second consecutive session on September 4 and closed above 19,500 for the first time since August 10, as all sectoral indices but FMCG closed in the green.

After opening higher at 19,525, the Nifty50 slipped but recovered immediately and gained momentum as the day progressed.

The index closed 94 points higher at 19,529 and formed a Doji candlestick on daily charts, as the closing was near the opening levels.

"Having formed such pattern after one session of rise, one may expect less impact on the negative side for the market in the short term," Nagaraj Shetti, technical research analyst at HDFC Securities said.

The next hurdle on the higher side is likely 19,600-19,650, which coincides with previous swing highs after the index decisively broke the falling resistance trendline adjoining the highs of July 20 (record high 19,992) and August 24.

The immediate support is expected to be 19,400 followed by 19,300-19,250 area, experts said.

"A decisive move above 19,600 levels is expected to pull the Nifty towards the next upside of around 19,800-19,900 levels in the near term. Immediate support is at 19,430 levels," Shetti said.

The option data indicated that the Nifty can move towards 19,600-19,700 in the coming sessions. Support is at 19,400.

On the options front, the maximum Call open interest was at 19,600 strike followed by 19,500 and 19,700 strikes, with Call writing at 19,700 and 19,800 strikes. The maximum Put open interest was at 19,400 strike, followed by 19,300 and 19,500 strikes, with Put writing at 19,500 strike, then 19,400 strike.

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Bank Nifty

The Bank Nifty gained 142 points to close at 44,578 and formed a small bodied bearish candlestick pattern with a long lower shadow. The index showed smart recovery from the day's low but remained below the opening level.

"The Bank Nifty index remains under bullish momentum, finding support within the 44,300-44,200 zone, which serves as a safety net for the bulls," Kunal Shah, senior technical & derivative analyst at LKP Securities said.

The immediate obstacle on the upside is at the 44,600-44,650 zone. A successful break of it would pave the way for the index to move towards 45,000 levels, where a substantial amount of open interest exists on the call side, making it a key area to watch, he said.

The broader market turned stronger as breadth remained positive with 3:2 ratio. Nifty midcap 100 and smallcap 100 indices gained 1 percent and 1.3 percent. The India VIX, which measures the volatility expected over the next 30 days, fell below 11, down 3.54 percent to 10.96, giving more comfort to the bulls.

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