The Nifty 50 rebounded sharply after a three-day correction, rising more than half a percent on December 11, thanks to the third rate cut announced by the US Federal Reserve last night. However, the index could not surpass the previous day's high of 25,950, which coincides with the short-term moving averages (10- and 20-day EMAs), one of the key hurdles for a continuation of buying interest toward the record high.
The index needs to surpass and sustain above 25,950, as well as 26,000 (the midline of the Bollinger Bands), for a move toward the 26,200–26,300 zone. However, 25,700 is expected to be the immediate crucial support going forward, as below this level, 25,500 becomes the next level to watch, according to experts.
The Nifty 50 tested 25,700 in the morning but gained strength after an initial hour of consolidation and maintained an upward journey as the day progressed. The index hit an intraday high of 25,923 before closing at 25,899, up 141 points (0.55 percent). It formed a bullish candle with a lower shadow on the daily charts, erasing most of the previous day’s losses and indicating a positive bias with buying at lower levels.
Positive divergence was seen on the intraday chart, and the Nifty daily chart indicates a possible short-term reversal formation on the upside, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities.
According to him, the market is attempting to reverse its short-term downtrend. “Further sustainable upside from here could confirm a crucial bottom reversal pattern. Hence, a decisive move above the hurdle of 25,950–26,000 levels could possibly open the next upside towards 26,250–26,300 levels in the near term,” he said, adding that immediate support is placed at 25,750.
Weekly options data indicated that 26,000 is expected to remain a crucial hurdle for the Nifty 50, with support at 25,700.
The 26,000 strike witnessed the maximum Call open interest, followed by the 26,500 and 26,100 strikes. Maximum Call writing was seen at the 26,350, 26,500, and 26,250 strikes, while maximum Put open interest was placed at the 25,800, 25,700, and 25,500 strikes, with maximum Put writing at the 25,700, 25,800, and 25,900 strikes.
Bank Nifty
The Bank Nifty also joined the rally, rising 249 points (0.42 percent) to climb above the 59,000 zone at 59,210. It formed a bullish candle with upper and lower shadows on the daily timeframe, indicating a positive bias amid volatility.
The banking index, however, could not hold on to the previous day's high (just above 59,400) and faced some pressure at higher levels before settling near the 10-day EMA and the midline of the Bollinger Bands (59,200–59,250). Hence, the immediate hurdle is seen at 59,250, followed by 59,400.
Further, the index has been oscillating near its 20-day EMA for the last three trading sessions and today managed to close well above it. “Going ahead, the zone of 58,900–58,800 will act as crucial support for the index. On the upside, the zone of 59,400–59,500 will act as an important hurdle,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
Meanwhile, the India VIX, known as the fear gauge, extended its fall for the third straight session and continues to sustain below all key moving averages, which is a comfort zone for the bulls. It was down 4.7 percent at 10.4.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
