Technical View | Nifty forms bullish candle; 18,100 to be next crucial resistance

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The Nifty50 as expected had a strong gap-up opening on October 31 and finally closed above the psychological 18,000 mark for the first time since September 13, driven by a rally in auto, banking & financial services, technology, and pharma stocks. The robust beginning of the week was especially after consolidation last week, and ahead of a special Reserve Bank of India (RBI) meeting and the Federal Reserve’s interest rate decision due later this week.

The index has formed a bullish candle on the daily charts as the closing was higher than the opening levels. Given the optimism, the 50-share NSE benchmark can march towards 18,100 if it strongly holds the 17,900-18,000 area in coming sessions, followed by which the next target would be 18,350, the high of current calendar year, with crucial support at 17,500-17,800 zone, experts said.

The broader markets had a mixed trend as the breadth was not completely in favour of bulls. About 1,084 shares advanced against 916 declining shares on the NSE. The Nifty Midcap 100 index was up 1.1 percent and Smallcap 100 index ended flat with a positive bias.

The Nifty50 opened gap-up by more than 100 points at 17,910 and hit an intraday high of 18,023. The index closed with 225-point gains at 18,012.

“The Nifty has formed a bullish candle and higher bottom formation, which is indicating the continuation of an uptrend in the near future,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

As long as the index trades above 17,900 the uptrend formation is likely to continue, and above the same, it could touch 18,100-18,150 levels.

Also read – Taking Stock | Nifty reclaims 18,000, Sensex back above 60,000 led by auto, pharma, IT

Below 17,900, traders may prefer to exit long positions, the market expert advised. On further decline it could retest the 17,800 mark, he said.

India VIX was down by 0.75 percent to 15.80 levels, which also made the bulls comfortable.

In the immediate term, the Nifty50 may trade in the range of 17,700 to 18,200 levels as per the Option data.

On the Option front, the maximum Call open interest was seen at 18,500 strike followed by 18,000 strike while the maximum Put open interest was seen at 17,000 strike, followed by 17,500 strike.

The marginal Call writing was seen at 18,500 strike followed by 18,200 strike while there was marginal Put writing at 18,000 strike and then 17,700 strike.

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Bank Nifty opened positive at 41,266 and after a slight decline in the initial tick, it moved in the upward direction and touched an intraday high of 41,350 level. Overall the banking index underperformed the broader market and closed with gains of 317 points at 41,308.

The index formed a small-bodied bullish candle on the daily frame but continued forming lower highs from the last three sessions. Now it has to hold above 41,250 level to make an up move towards 41,840 and 42,000 levels whereas supports are placed at 41,000 and 40,750, Chandan Taparia, Vice President, Analyst-Derivatives at Motilal Oswal Financial Services said.

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.

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