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Technical View | Nifty likely to consolidate further, crucial support at 18,000 – Moneycontrol

The Nifty50, after initial volatility, gained strength and maintained an upward journey in the rest of the session to close near 18,200 on January 2, the first trading day of 2023. The index has formed a bullish candle which resembles an Inside Bar kind of pattern on the daily charts.

The index has been consolidating in the 250-point range for the last five straight sessions, taking strong support at 18,000-18,100 zone and on the upper side, it has a strong hurdle at 18,250 level. Hence, unless and until it decisively breaks 18,000, a major correction is unlikely, whereas the crossing of 18,250 may drive the Nifty towards 18,400 area, experts said.

Positive trends in European markets, as well as buying in most sectors barring pharma, supported the market on Monday.

The Nifty50 opened higher at 18,132 and wiped out gains to correct up to 18,086, but after initial 15 minutes of volatility, the index recouped all losses and traded higher in the remaining part of the session. It hit an intraday high of 18,215 in late trade before closing the session at 18,198, up 92 points.

“The Nifty is consolidating between 18,050 and 18,250 levels. For the bulls, 18,250 would be the fresh breakout level to watch out for, and above the same, it could move up to 18,350-18,400,” Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

On the flip side, he feels that below 18,100, there is a strong possibility of a quick intraday correction. Below the same, the index could slip to 18,050-18,000.

Per weekly Option data, the expected trading range for the Nifty50 could be 18,000-18,400 levels.

On Option front, maximum Call open interest is at 18,300 strike followed by 18,500 strike, with Call writing at 18,200 strike and then 18,300 strike. On the Put side, the maximum open interest was seen at 18,000 strike followed by 18,100 strike, with writing at 18,200 strike and then 18,100 strike.

India VIX was down by 1.22 percent from 14.87 to 14.69 levels, giving further comfort to bulls. If the volatility drops further and settles below the 14 mark then the market could see a smoother ride going ahead, experts said.

The Bank Nifty opened positive above the 43,000 mark and moved in a zig-zag manner within a broader range of 420 points. It failed to cross its previous day’s higher zone but managed to hold support near to 43,000 level and closed with gains of 217 points at 43,203.

The banking index formed a bullish candle and an inside bar on the daily scale. Now it has to hold above the 43,250 level to make an up move towards 43,500 and 43,750 levels, whereas on the downside, the support is placed at 43,000 and 42,750 levels, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

The broader markets sustained an uptrend for yet another session with the Nifty Midcap 100 index rising 0.9 percent, forming a bullish candle with a lower shadow on the daily charts, making a higher high for the fifth straight session, while the Nifty Smallcap 100 index gained 0.7 percent.

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