It was a largely lacklustre week for the market as the Nifty50 traded in a 350 point-range, though in between it climbed up to the near-term resistance of 17,500 and crucial support around 17,150, and formed a small-bodied bullish candle on the weekly scale. On August 5, the index recouped its previous day’s losses amid rangebound trade and closed moderately higher as the RBI acted in line with street expectations by raising the repo rate by 50 bps to 5.40 percent and retaining the full-year growth projection at 7.2 percent and inflation forecast at 6.7 percent.
The Nifty has seen a formation of a Doji kind of pattern on the daily charts as the closing was near its opening levels, indicating indecisiveness among bulls and bears about future market direction. Hence, Friday’s low point (17,348) can act as a support in the next session followed by crucial support at 17,150-17,000 levels, while if it crosses the near-term resistance (17,500) in coming sessions, then the index can climb towards 17,800 levels, experts said.
It opened higher at 17,424 and remained on the higher side for the major part of the session, to hit a day’s high of 17,474. The index did fall to hit an intraday low of 17,349 in late trade, but immediately bounced back amid volatility and closed with 15.50 points gains at 17,397.50, while during the week, it gained 1.4 percent.
“The market may be losing its momentum as the index witnessed a narrow move of 346 points for the week which resulted in a narrow bull candle whereas daily charts witnessed a Doji kind of formation,” Mazhar Mohammad, Founder & Chief Market Strategist at Chartviewindia said.
The analyst further said sell signals on some of the daily momentum oscillators are accompanied by overbought levels on the weekly charts perhaps hinting at an impending downswing. Hence, any weakness in the next session below 17,348 levels can initially drag it down towards 17,160, and if it closes below it, then it can test the bullish gap zone present between 17,018 and 16,947 levels that was registered on July 29.
Contrary to this, strength can be expected only at a close above 17,500 levels which should expand the rally towards 17,800 levels.
Hence, the market expert advised traders to avoid long positions in the index unless it closes above 17,500 whereas shorting can be considered below 17,380 levels for a target of 17,170.
The volatility cooled down a bit, supporting the bulls to stay at Dalal Street, but overall it remained on the higher side. India VIX, the fear index fell by 1.77 percent to 18.92 levels.
On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,500 strike while there was maximum Put open interest at 16,500 strike followed by 17,000 strike. Marginal Call writing was seen at 17,400 strike then 17,600 strike while Put writing was seen at 17,400 then 17,200 strike.
Option data indicated that in the immediate term, the Nifty may trade in a range between 17,100 and 17,600 levels.
Bank Nifty opened higher and gained strength in the first half of the day to hit a day’s high of 38,150. The banking index fell from that level and took support near 37,780 levels, before closing with gains of 165 points at 37,921 and forming a Doji or Inside Bar kind of pattern on the daily scale.
It has been making higher lows over the last seven weeks and supports are gradually shifting higher. Now it has to hold above 37,777 levels to make an up move towards 38,250 and 38,500 levels, whereas supports are placed at 37,500 and 37,250 zones, Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.
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