Technical View | Nifty may march towards 18,700, volatility index at 16-month low

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The Nifty got back above the crucial 18,500 mark to close 0.6 percent higher on December 13, as retail inflation falling to an 11-month low raised hopes of a slower pace of rate hike. A rally in the global market also helped Indian shares.

The index opened higher at 18,524 but corrected to 18,490 and then immediately rebounded in initial hours to move higher for the rest of the session. It hit the day's high of 18,617 and rallied 111 points to close at 18,608.

The Nifty closed above the 20-day simple moving average (18,514) and formed a bullish candle on the daily charts, making higher highs, higher lows. It also broke out of the small downward sloping resistance trend line adjoining December 1 and December 9.

Hence, the uptrend is likely to continue in the coming days, with the next resistance at 18,700 and then the record high of 18,888, with support at 18,500 and 18,400, experts said.

"Technically, the market not only reclaimed the 20-day SMA level but also closed above the same which is broadly positive. The bullish candle on daily carts and promising reversal formation is indicating the continuation of an uptrend wave in the near future," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said.

Chouhan said the uptrend texture is likely to continue in the near future and 18,700-18,725 would be the next resistance zone.

A fresh selloff is possible if the index slips below 18,450, the market expert said.

The options data indicated that the Nifty may trade in the 18,400-18,750 range in the coming sessions. The maximum Call open interest was at 19,000 strike followed by 20,000 strike, with Call writing at 18,900 strike then 18,950 strike.

The maximum Put open interest was at 18,000 strike followed by 18,500 strike, with Put writing at 18,400 strike then 18,500 strike.

The volatility index India VIX was down by 3.26 percent from 13.31 to 12.88, its lowest closing level since August 2021, making the ground more comfortable for bulls.

Banking index

The Bank Nifty opened 85 points higher at 43,794 and registered a fresh all-time high of 43,984. It closed 238 points higher at 43,946.

The banking index formed a bullish candle on the daily frame and made higher lows for the fourth session. It has to hold above 43,750 to make a move towards 44,250 and 44,444, with supports at 43,750 and 43,500, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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