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The Nifty 50 gained major strength in afternoon trade after morning volatility and recorded a percent rally on January 24, ahead of monthly expiry of January futures & options contracts due tomorrow.
The index, as expected, faced resistance at 21,500, which is expected to be a crucial level for further sharp upward move. In case the index manages to hold the same, then 21,700 will be next critical hurdle, whereas on the lower side, 21,300-21,200 will be an immediate support area to watch, experts said.
The Nifty 50 started off the day on a negative note and hit a day’s low of 21,137. After morning volatility, the bulls gained strength in afternoon session and pushed the index to 21,482 in late trade, before closing 215 points higher at 21,454, partly led by short covering in most beaten down stocks.
The index has formed long bullish candlestick pattern on the daily charts with healthy volumes.
“On the hourly chart, the index began displaying initial signs of a reversal. However, it closed below the resistance level of 21,500,” Rupak De, senior technical analyst at LKP Securities said.
He feels a decisive move above 21,500 could potentially trigger a significant rally in the index. “A confirmed breakthrough above 21,500 may propel the index towards 21,700 and beyond.”
On the downside, the support is situated at 21,400-21,350, Rupak said.
On the options front, the 22,000 strike owned the maximum Call open interest, followed by 21,700 strike and 21,800 strike, with Call writing at 22,000 strike, then 21,600 strike, while the maximum Put open interest was at 21,000 strike, followed by 21,300 strike and 20,500 strike, with Put writing at 21,400 strike, then 21,300 strike.
The above options data indicated that 21,700-21,800 is expected to be next key resistance area, in case the index shows further uptrend in following session, with support at 21,300 area.
Bank Nifty
The Bank Nifty also opened gap down at 44,489, which was also day’s low and also broken the 200-day EMA (exponential moving average – 44,565), but managed to rebound from the same low amid volatility and closed the consolidative session 67 points higher at 45,082.
The banking index managed to hold on to 45,000 mark for yet another session and formed bullish candlestick pattern with upper shadow on the daily charts.
Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas expects the said consolidation to continue going ahead in the range 44,500 – 45,750.
“Minor degree pullback towards 45,460 – 45,810 should be used as a selling opportunity.” On the downside, he expects the Bank Nifty to drift towards 44,500 – 44,400 from short term perspective.
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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Technical View: 21,500 mark crucial for Nifty upside on F&O expiry day, Bank Nifty defends 200-day EMA – Moneycontrol
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