The Nifty 50 staged a smart recovery of more than 600 points from its day's low and surpassed immediate hurdles of 24,700–24,750 on December 13, with volatility reaching a nearly two-month low. The index has seen a consolidation breakout, but sustaining above 24,700 is crucial for further upward movement. If it holds this level, 24,858 (the high of the previous week) will be the first hurdle, followed by the 25,000–25,100 zone, which is a crucial resistance area. On the downside, 24,500–24,400 is expected to act as a support zone, experts said.
The Nifty 50 opened below 24,500, which was the lower end of the last five-day consolidation, and extended its correction to 24,181 in the morning trade. In fact, the fall was so severe that the index dropped below all key moving averages (except the 200-day EMA). However, the trend reversed in late morning trade, and the index moved closer to 24,800 by the end of the session. It finished the day at 24,768, up 220 points, and formed a bullish candlestick pattern with a lower shadow on the daily charts, indicating strong buying interest at lower levels.
On the weekly timeframe, the index gained 0.4%, extending its uptrend for the fourth consecutive week. It also formed an Inside Bar pattern, making the extremes of the previous candle—24,858 on the upside and 24,009 on the downside—crucial levels to watch for the upcoming week.
Jatin Gedia, Technical Research Analyst at Mirae Asset Sharekhan, expects the pattern to break out on the upside and continue the positive momentum towards 25,125 during the upcoming week.
On the downside, the 24,420–24,400 range is seen as the crucial support zone, he said.
According to the derivative data, the maximum open interest on the Call side was seen at the 25,000 strike, followed by the 25,500 and 25,100 strikes, with maximum writing at the 25,100 strike, followed by the 24,800 and 25,000 strikes. On the Put side, the maximum open interest was at the 24,500 strike, followed by the 24,400 and 24,700 strikes, with maximum writing at the 24,500 strike, followed by the 24,400 and 24,700 strikes.
The weekly options data indicates that the 24,500 level is the next resistance zone for the Nifty 50, while support is placed at 24,500. The Nifty weekly Put-Call Ratio (PCR) improved from 0.70 to 1.04, suggesting a bullish sentiment. Overall, we expect positive momentum to continue, said Jatin.
Bank Nifty
The Bank Nifty showed a similar trend, rising 367 points to 53,584 and forming a bullish candlestick pattern with a long lower shadow on the daily timeframe. It recovered nearly 1,400 points from day's low.
However, on a weekly basis, it formed an Inside Bar pattern, indicating that the high (53,888) and low (51,694) of the previous week are crucial levels to watch for the upcoming week. The Bank Nifty gained 0.14% during the week.
Amol Athawale, VP-Technical Research at Kotak Securities, believes the short-term formation is bullish for the Bank Nifty. "53,000 and 52,800 will be the key support zones, while 54,000–54,300 could act as important resistance areas for traders," he said.
Volatility declined for the sixth consecutive session, reaching a nearly two-month low on Friday, which provided further comfort for the bulls. The India VIX, the fear index, was down by 1.04% at 13.05, and it dropped 7.69% for the week.
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