Technical View | Late recovery helps Nifty form bullish candle, 17,800 crucial for uptrend

The Nifty ended higher for the third straight session following a recovery in the last 30 minutes of the trade on March 8, aided by gains in banks, auto, FMCG and oil & gas names.

After opening lower, the index slipped to the day’s low of 17,602, tracking weakness in Asian peers following US Fed Chair Jerome Powell’s statement hinting at more rate hikes. The index, however, recovered in the late trade to close 43 points higher at 17,754.

The index formed a bullish candlestick on the daily charts as the closing was higher than the opening level. Going ahead, 17,800 is expected to remain crucial for further uptrend and the index can move to 18,000, with near- term support of 17,600-17,500, experts said.

On the daily chart, the index found support near its 9-day exponential moving average (EMA), which is placed at 17,597.

“The overall majority of the time prices were trading above their short-term averages and within the range of the previous day’s candle. The momentum oscillator RSI (relative strength index 14) is hovering within the 55 – 25 range, for the past two months which suggests a break above 55 levels will ensure a strong momentum in the trade,” Rohan Patil, Technical Analyst at SAMCO Securities said.

The index needs to cross 17,800–17,850 for a shift in momentum. On the lower side, 17,600 and 17,550 will act as supports, he added.

The options data also suggested that 17,800 will be crucial resistance for the coming sessions, with support at 17,600-17,700 levels.

On the weekly Options front, the maximum Call open interest was at 17,800 strike, followed by 18,000 strike and 17,900 strike, with Call writing at 17,800 strike, then 17,900-18,000 strikes.

On the Put side, the maximum open interest was at 17,600 strike, followed by 17,700 strike and 17,500 strike, with writing at 17,600 strike then 17,700 strike.

The India VIX, the fear index,  rose 1.48 percent from 12.27 to 12.45 levels. Volatility moved up slightly for the day but overall, it has remained at lower levels.

Banking index

The Bank Nifty opened on a negative note at 41,178 due to global weakness and drifted lower towards 41,100 in the initial tick but witnessed a decent spurt in the last hour.

It closed 227 points higher at 41,577 and formed a bullish candle, which resembled the Bullish Engulfing pattern on the daily charts.

“Now it has to continue to hold above 41,500 levels to make an up move towards 41,750 then 42,000 levels, whereas on the downside, support shifted higher at 41,250 then 41,000 levels,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services, said.

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