Bulls retained their power at Dalal Street throughout session on February 8 and helped the Nifty50 jump to the highest closing level in last nine straight trading days, after the Reserve Bank of India acted in line with analysts' expectations. The central bank raised repo rate by 25 bps to 6.5 percent and continued with withdrawal of accommodation stance.
The index started off the policy day higher at 17,750 and climbed near 17,900 level during intraday trade. Finally, it settled with gains of 150 points at 17,872 and recouped all its previous two-day losses, forming bullish candle on the daily charts, with making higher high higher low formation.
The Nifty50 has been in the range of Budget day (17,353-17,972) for fifth day in a row, hence unless and until it takes out decisively the high of that day, the volatility and rangebound trade is likely to continue with crucial support at 17,700-17,550 area, experts said.
The rally was led by technology, metal, pharma, and select banking & financial services stocks.
"The Nifty has formed a bullish candle on daily charts, which is broadly positive. However, 17,950 could be the next profit booking zone for the bulls," said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
He feels as long as the index is trading above 17,750, the uptrend wave will continue. Above the same, the market could move up to 18150. On the flip side, below 17,750, uptrend would be vulnerable, the expert said.
The Option data suggests that 18,000-18,100 is expected to be crucial resistance area in coming sessions, with major support between 17,800-17,500 area, where we have maximum Put open interest.
On the weekly basis, we have seen maximum Call open interest at 18,000 strike, followed by 18,100 strike and 18,500 strike, with Call writing at 18,100 strike then 18,000 strike, whereas the maximum Put open interest was seen at 17,800 strike followed by 17,700 strike then 17,500-17,600 levels, with Put writing at 17,800 strike then 17,600-17,700 strikes.
India VIX fell by 3.75 percent from 14.13 to 13.60 levels, giving more comfort to bulls.
Bank Nifty opened positive at 41,542 and extended its momentum towards 41,800 ahead of the monetary policy. However, it failed to hold at higher zones and drifted towards 41,400 levels during the day. Later on, it remained consolidative in between 41,400 to 41,600 levels, and relatively underperformed the benchmark index.
The banking index closed 47 points higher at 41,538 and has formed a Doji candle on daily scale, which suggests tug of war between bulls and bears near 41,500 level while facing minor resistance near its 20 DEMA (41,636) from past three sessions.
"Now it has to continue to hold above 41,500 level, to make an up move towards 41,750 and 42,000 levels, whereas supports are expected at 41,250 then 41,000 levels," said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
The broader markets also gained momentum with the Nifty Midcap 100 and Smallcap 100 indices rising 0.9 percent and 0.8 percent respectively on positive breadth.
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