Technical View | Sharp upmove unlikely until Nifty surpasses 17,200

The Nifty50 managed to extend gains for the second consecutive session, though it was rangebound trade throughout the day on March 22, especially ahead of Fed meet outcome tonight. Positive Asian cues and buying in select stocks across key sectors supported the market.

The index opened higher at 17,177 and maintained a positive trend till the closing. It touched an intraday high of 17,207 and a low of 17,108, before closing with 44 points gains at 17,152.

The Nifty50 has formed a small-bodied bearish candle with upper and lower shadows on the daily charts, as the closing was lower than the opening levels, indicating signs of volatility. Unless and until the index gives a decisive close above 17,200, further sharp upside move towards the 17,300-17,500 area is unlikely in the near term, whereas 17,000 is expected to be the near-term support followed by 16,800, experts said.

The index remained below 200-day EMA (17,543) for the tenth straight session.

"A small negative candle was formed on the daily chart with upper and lower shadows. Technically, this market action indicates the formation of a high wave-type candle pattern. Normally, such patterns after a reasonable upmove signal reversal of the upside, post confirmation," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

He believes that unless the immediate resistance of 17,200 is taken out decisively on the upside, the chances of a sharp upmove could be less.

"The market is also waiting for the cues from the Fed outcome in the US on Wednesday. Immediate support is at 17,020 levels," Nagaraj said.

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As per weekly Option data, 17,500 strike attracted the maximum Call Open interest, followed by 17,400 to 17,200 strikes, which are expected to be hurdles for the Nifty in the coming sessions. The Call writing was also seen in a similar flow on these strikes.

On the Put side, we have seen maximum open interest at 17,000 strike, which is going to be near term support zone for the index, followed by 16,800 and 17,100 strikes, with writing at 17,100 strike, then 16,800 strike.

"The Nifty index is going into the Fed event today with the highest open interest at the 17,000 PE level on the Put side and the Highest OI on the Calls side at the 17,500 level," Rahul Ghose, Founder & CEO – Hedged said.

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He believes that the Nifty will turn into a sell-on-rally only after the breach of 16,800 on the daily charts, which will also ensure a break in its trendline. Until then, the sell-on-rally texture of the market is on pause, he said.

The Bank Nifty opened above the psychological 40,000 mark and remained highly volatile during the day. It hit a day's high of 40,086 and a low of 39,838 before closing the session at 39,999, up 104 points. The index has formed a Doji kind of pattern on the daily charts ahead of the outcome of the two-day Federal Reserve meeting, indicating indecisiveness among bulls and bears, but continued making a higher high higher low formation for the second day in a row.

"The Bank Nifty will gain momentum all the way up to 40,800 once it crosses the 40,200 mark. Then there is a congestion zone between 40,800 and 41200, and beyond 41200, fresh long positions can be aggressively initiated on this index," Ghose said.

The volatility declined further below the 15 mark, giving some comfort for bulls. India VIX, the fear index dropped 1.82 percent to 14.81 levels, from 15.08 levels.

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