Technical View | Nifty reclaims 18,100, fear index drops to a month's low

The Nifty traded higher on January 23 on widespread buying and positive Asian and European cues and closed 91 points higher at 18,118, snapping a two-day losing streak.

The index opened higher at 18,118 and extended the uptrend to hit the day’s high of 18,163. It reversed some of the gains in the afternoon to sink to the day’s low of 18,063 but managed to get back above 18,100 in the last hour of trade.

It formed a long-legged Doji pattern on the daily charts, indicating a tug-of-war between the bulls and the bears. In the long-legged Doji, prices close at or near opening levels with long upper and lower shadows, signalling indecision. It also shows uncertainty in the market or the possibility of a reversal in market trend.

The Nifty has to decisively surpass the last week's high of 18,184 for a strong momentum, where initial hurdles will be 18,200 and 18,300 and support at 18,000, experts said.

The index is trading above its 50-day exponential moving average (DEMA; 18,098) as well as the 20-day daily moving average (DMA) at 18,048, which can also act as a support.

"If the optimism continues, we may see some pre-budget rally in the truncated week. Despite the strong momentum, Nifty failed to clear the 18,180 resistance mark," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

The index is trading above the 20-day simple moving average (SMA) and also holding a higher bottom formation on intraday charts which is largely positive, he feels.

For the traders, 18,000 would be the trend decider level, above which the index can move to 18,200-18,250. Below 18,000, selling pressure is likely to intensify and the index can to 17,950-17,900, Chouhan added.

The options data indicates that the Nifty may trade in the 18,000-18,250 range in the near term.

The maximum Call open interest was at 18,100 strike followed by 18,200 strike, with Call writing at 18,300 strike then 18,200 strike.

On the Put side, the maximum open interest was at 18,100 strike followed by 18,000 strike, with writing at 18,100 strike then 18,000 strike.

Volatility index India VIX slipped further by 1.23 percent to 13.62 level, the lowest since December 19, 2022, giving more comfort to bulls.

Banking index

The Bank Nifty opened nearly 400 points higher at 42,891 but failed to hold on to 43,000. It moved in a 150-point range between 42,725 to 42,865 in the second half of the session.

The closed 314 points higher at 42,821 and formed a small-bodied bearish candle on the daily scale with upper and lower shadows, indicating indecisiveness among bulls and bears.

"It has to hold above 42,700 level to make an up move towards 43,000 and 43,333 levels, whereas supports are placed at 42,500 then 42,222 levels," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.