Technical View | Nifty forms bullish candle on F&O expiry day; 17,000 to remain trend decider

Representative image.

The Nifty50 gained more than 100 points on March 29, the day of futures and options contracts expiry, forming a bullish candlestick pattern on the daily charts, but broadly in the range of 16,900-17,150 for the fourth consecutive session.

With the current optimism and the breaking of lower top formation of the last four straight days, the index may march towards the 17,200-17,250 area but the sustainability above the same is important. If the index sustains above the same, then the next resistance area could be 17,450-17,500, whereas the 17,000-16,800 zone is likely to play a crucial role on the downside, experts said.

The Nifty50 opened higher at 16,977 and remained in positive terrain for the major part of the session, hitting the day's high of 17,126. The index closed with 129 points gains at 17,081.

"After the breakout of the 17,050 range, the positive momentum intensified. A promising reversal formation and long bullish candle on daily charts are indicating further uptrend from the current levels," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

For the bulls, he feels that 17,000 would act as a trend decider level and above the same, the index could move up to 17,200-17,250. On the flip side, below 17,000 the uptrend would be vulnerable, he added.

Since it's the beginning of the new series, Option data has scattered at various far strikes in the monthly series. We have seen maximum Call open interest at 17,100 strike, followed by 17,000 strike, with Call writing only at 17,100 strike, which is expected to be a crucial level for the further uptrend in coming sessions.

On the Put side, the maximum open interest was seen at 17,000 strike, followed by 16,900 and 16,800 strike, which may be crucial levels on the downside, with writing at 17,000 strike, then 17,100 strike.

Most sectors participated in the market rally, barring oil and gas.

Amongst them, the Bank Nifty opened on a positive note and managed to surpass its crucial hurdle of 39,750 to extend its momentum towards the 40,000 mark in the latter part of the session. The index rose 342 points to 39,910 and formed a bullish candle and negated the formation of lower highs on the daily scale after four sessions.

"It relatively outperformed the broader markets as good support-based buying was seen in banking stocks. It has to hold above 39,750 levels for a bounce towards 40,250 then 40,500, whereas the support has been shifted higher to 39,600 levels, then 39,400," Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.

Volatility has fallen considerably from its highs, and now at the lowest levels of the last 13 trading sessions, giving some comfort to the bulls. India VIX was down by 9.75 percent from 15.10 to 13.63 levels.

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