Technical View | Nifty resumes uptrend after minor correction; 19,800 crucial for further upside

The Bank Nifty settled at 46,062, up 217 points.

The Nifty50 has taken good support at 10-day exponential moving average (EMA) of 19,650 and rebounded smartly on July 26. The index traded higher throughout the session, backed by FMCG, banks, metal, pharma and oil and gas stocks.

The index started off trade above 19,700 and remained above the same for the entire session to hit a day's high of 19,826. It finally settled with nearly 100 points gains at 19,778 and formed a bullish candlestick with a small upper shadow on the daily charts. If the index sustains five-day EMA of 19,738, the uptrend may continue and strong closing above 19,800-19,850 levels may help it drive over the much-awaited psychological 20,000 mark, experts said.

"Technically, today's candlestick pattern indicates an upside bounce in the market from near the immediate support of 10-day EMA around 19.650 levels. But the market seems to be facing resistance at 19,800 levels," Nagaraj Shetti, technical research analyst at HDFC Securities said.

He believes that the minor downward correction of the last few sessions seems to have completed and the market is now shifted into an upside bounce.

"A decisive move above 19,850 is likely to open doors for the higher target of 20,050 in the near term. Immediate support is at 19,600 levels," he said.

Options data indicated that 19,800-20,000 can be crucial resistance for the Nifty50 in coming sessions, with support at 19,700-19,500 zone.

We have seen maximum Call open interest at 20,000 strike, followed by 19,800 strike, and 19,900 strike, with meaningful Call writing at 19,900 strike, then 20,000 strike, whereas the maximum Put open interest was at 19,700 strike, followed by 19,600 strike, with Put writing at 19,700 strike, then 19,800 and 19,600 strikes.

Bank Nifty

After struggling for a couple of days, the Bank Nifty got back above the 46,000 mark, but traded within the previous day's trading range. As a result, there was an Inside Bar kind of candlestick formation on the daily charts, though it was a bullish candlestick pattern with a small lower shadow.

The Bank Nifty settled at 46,062, up 217 points. If the index sustains above 46,000 going ahead, then 46,500 can be the next target to watch. Otherwise, rangebound trade may continue, experts said.

"The Bank Nifty witnessed a bounce from the cluster of 45,670 – 45,700 where support parameters in the form of the 38.2 percent Fibonacci retracement level and the 40-hour moving average were placed. The fall as well as the rise on the hourly time frame are overlapping in nature which gives us a sense that the Bank Nifty is undergoing a corrective phase that is not over yet," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.

Once this consolidation phase is over, one can expect the uptrend to resume and expect it to target 46,500, he said.

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